The Department of Public Enterprises (DPE) has released the text of the remarks made at the meeting of the creditors of State-owned national flag carrier South African Airways (SAA) on Tuesday, by its acting director-general, Kgathatso Tlhakudi. SAA is under business rescue and at the meeting the creditors voted in favour of the proposed business rescue plan for the airline.

He started by denying that the effort to save SAA had been a vanity project by the DPE or the National Treasury. He affirmed that rescuing the airline was good for the country. He assured that the government and business rescue practitioners had made use of credible and internationally respected “resources” to help with the expertise needed for the rescue plan to succeed. He affirmed that the DPE had been “humbled by the support of organised labour”.

“We believe that an example for a responsible business transformation process has been set for the South African public and private sector,” he said. “The parties entered the process understanding everyone will have to give in a little to attain the bigger picture.”

Tlhakudi argued that the revival of SAA would be beneficial for the country for several reasons. He started by stating that the repatriation of South Africans stranded abroad and the transport of essential medical supplies had been possible because of the existence of SAA. He added that South Africa could not rely on airlines from other countries because they were dealing with the Covid-19 emergency.

He further pointed out that, because of the long distances between the region’s economic centres, an effective air transport network was essential for the integration of Southern Africa. South Africa’s own economy depended on international trade and investment, and air transport was essential in facilitating this. And international tourism was extremely important for the economy, employment and conservation in the country.

“The restructuring is different from previous attempts at turning around the business,” he assured. “The old way of contracting for labour and services is being departed from. Productivity and efficiency will guide the performance system going forward. We need an SAA which will emerge from this restructuring and its subsidiaries to be attractive assets that will attract strategic equity partnerships and other business partners.”

He also assured that it would not be “too long a time” before the government was able to announce the preferred strategic equity partners for the SAA group and its “various business units”. The appointment process for a transaction adviser, who would firm up the preliminary contacts between the government and likely strategic equity partners, would soon be concluded.  

“The business [rescue] model has catered for a responsible ramp-up of operations in response to the pandemic trajectory, which is due to peak in South Africa between August and September 2020,” stated Tlhakudi. “The base established will ensure a firm foundation  for growth going forward.”