Trade union Solidarity has served court papers on embattled State-owned airline South African Airways (SAA) and on the Ministers of Finance and Public Enterprises.

The union has asked the court to put SAA into business rescue. If granted, a business rescue practitioner would have to be appointed, who would have extensive powers to save the airline, or at least parts of it. Under the Companies Act, Solidarity pointed out, State-owned companies could be placed in business rescue (although this has never yet been done). The Act also allows trade unions to bring such applications to the courts.

“We are profoundly aware of the crisis SAA finds itself in,” stated Solidarity CEO Dirk Hermann. “SAA is heading for liquidation, which will have huge consequences for employees, the South African economy and taxpayers. In all, 11 000 workers will lose their jobs and a debt burden of billions of rands will have to be absorbed by the Treasury, if there is no radical intervention.”

The union intended to seek business rescue for the airline last year, but, as a result of negotiations with then SAA CEO Vuyani Jarana, an agreement was reached and the application was dropped. “Solidarity had great confidence in Jarana, and still has,” said Hermann. “However, he has left and . . . the agreement reached could not be implemented.”

Tax money being used to keep the airline afloat could not be used to provide services for the poor. Only a small part of the country’s population could make use of air travel.

The union has held talks with the SAA board and with the Minister of Public Enterprises and his officials. These proved fruitless. “A business rescue application is the only remaining option to limit the damage,” he added. “Recent events at SAA accelerated the crisis – SAA’s Day Zero is imminent. The current shareholder has lost control over finding a solution for SAA.”

“According to the 2017 financial statements, there was a loss [by SAA] of R5 569 000 000,” pointed out Solidarity Research Institute head Connie Mulder. “This means that R15 257 534 was being lost very day. Every hour, we are losing R635 730, and every minute R10 595.51. Since 2017, no new statements have been published and it can be assumed that the situation is only getting worse. Every day that goes by must therefore be regarded as a crisis.”

Also, according to the 2017 financial statements, SAA had a debt of R33-billion. Meanwhile, the airline’s accumulated loses rose from R16-billion in 2013 to R31-billion in 2019. It had announced its intention to undertake retrenchments.

Solidarity’s court papers included a thoroughgoing turnaround plan for the airline, drawn up by a group of local and international aviation experts. The union believed that parts of SAA were still viable and, under business rescue, could be saved. Solidarity hoped that it would get a court date for its business rescue application in the near future – perhaps this month.

“We do not believe in building castles in the air,” affirmed Hermann. “We are realistic about the possibilities that accompany business rescue. It is not the perfect solution, but SAA’s circumstances are also not perfect. To wait until SAA turns around perfectly by itself, given the history, is irresponsible and is not grounded in the reality that this enterprise is on its way to total collapse. “Business rescue offers an opportunity to make an emergency landing instead of aiming for disaster. SAA will not be able to continue in this current format. It has never been sustainable. “Business rescue means that we can limit the damage to all relevant interest groups, we can create security and we can save billions in tax money. The longer we take, the worse the consequences will be.”