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SAA business rescue plan might not be adequate, govt says

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SAA business rescue plan might not be adequate, govt says

17th June 2020

By: African News Agency

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South Africa's government said it was concerned that a business rescue plan for troubled national carrier South African Airways (SAA) published late on Tuesday might not be adequate.

The government placed financially strapped South African Airways under business rescue last December, but efforts to revive its fortunes have so far stuttered partly due to the Covid-19 pandemic which has hamstrung air travel globally.

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In a statement released late on Tuesday as a "preliminary" response to the business rescue plan, the department of public enterprises said the government would support a proposal which resulted in a viable, sustainable and competitive airline that provided integrated domestic, regional and international flight services.

Local media reported that the plan, not yet seen by the African News Agency, puts the state’s bill for settling SAA's current liabilities and funding the restructured airline at R26.7-billion (US$1.6-billion).

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According to online news outlet Moneyweb, the plan stipulates that in the initial phase of the restructuring, SAA would only service domestic routes as allowed under South Africa's current lockdown rules aimed at curbing transmissions of the coronavirus.

SAA would initially only retain 1 000 members out of its current 4 622 domestic employees, meaning 78 percent would be retrenched. 

In its statement, the public enterprises department said the business rescue practitioners had had substantial time and R5.5-billion to undertake the tasks expected of them.

"We will assess the plan which, we are concerned, might not have been adequately accomplished," the department said.

Public enterprises minister Pravin Gordhan has previously intimated that the business rescue practitioners had fallen short of the government's expectations. Labour unions at SAA have also accused them of not being committed to rescuing the airline and saving jobs. .

On their part, the practitioners have argued that a lack of funding severely hampered their work.

On Tuesday the public enterprises department said it wished to engage constructively towards creating a "viable, competitive, sustainable airline in a constrained fiscal environment, taking into account the impact of (the) Covid-19 pandemic on this situation".

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