eBusiness Weekly
The Pravin Gordhan-led Department of Public Enterprises has discouraged South African Airways management, creditors and unions from making any decisions that could lead to the winding down of the national carrier and disposing of its assets.
SAA went into business rescue in December last year following years of losses and repeated state bailouts.
Seven months later, its business rescue plan has still not been voted on by creditors.
Last week creditors voted in favour of postponing a vote on the airline’s business rescue plan to July 14, which raised the possibility that the flag carrier could eventually be liquidated, in what would be unprecedented end for a state-owned enterprise.
Winding down the airline and disposing of its assets would cause financial hardship for the over 5 000 employees and undervaluation of assets, a statement from the department yesterday said, adding that it believed business rescue was a viable alternative to liquidation.
Business rescue would preserve jobs and bring the airline back from the brink to a position where some staff and creditors could “continue to contribute to the South African economy and its integration into the global economy,” the department said.
Creditors would receive a “negligible dividend” after liquidation proceedings and employees would receive a maximum of R32 000 per staff member, regardless of years of service to the extent that there are funds available, it said.
The DPE “. . . is convinced that the R2,2 billion budgeted for voluntary severance packages for SAA employees is the best available option at a time when government is faced with massive financial demands and fiscal constraints.”
While National Union of Metal Workers of South Africa spokesperson Phakamile Hlubi-Majola could not immediately comment on the statement yesterday morning, she referred Fin24 to a statement the union released with the South African Cabin Crew Association last Friday.
That joint statement said the business rescue practitioners failed to consult employees on the development of the plan, and demanded that they develop a better one for employees.
“It is our view that the plan, as currently constructed, has little chance of successfully relaunching SAA, unfairly targets labour and has too many errors and poor assumptions in it for it to be passed,” the joint statement said.
The statement urged business rescue practitioners to use the time they had ahead of the vote to amend the plan to address its “deficiencies”. — Fin24
