Department of Public Enterprises deputy director-general Advocate Melanchton Makobe effectively confirmed on Thursday that State-owned South African Airways (SAA) would be restructured, as a result of going into business rescue. “That business rescue plan is, in effect, a restructuring plan for the airline,” he said. “It will mean looking at the airline – which routes to operate, which routes not to operate.”
The government’s latest financial guarantee, worth R2-billion, was “post [business rescue plan] commencement finance”, which would allow the airline to continue operating while in business rescue. “This is not a bailout, as government cannot continue to bail out SAA,” he assured. “So, the bailouts have come to an end.”
Separately, the Turnaround Management Association of Southern Africa (TMA-SA) has expressed support for the placing of SAA in business rescue. The association’s membership includes more than 65 licensed South African business rescue practitioners.
“Time is of the essence,” stressed TMA-SA Chapter president and board chairman Alastair Macduff. “A timeous turnaround of the business is in the interest of all involved and in the interest of all South Africans. It is important to protect the interests of all stakeholders in this situation. In the case of SAA, this is even more important due to its national profile.”
Earlier on Thursday, lawyers for the Solidarity trade union, the Minister of Public Enterprises, the Minister of Finance, and SAA, in a meeting on Thursday with the Deputy Judge President of the South Gauteng High Court, all agreed that SAA was now under business rescue. This was reported by the union in a press release.
SAA agreed to ratify a resolution with the Companies and Intellectual Property Commission to the effect that the airline be, that same day, voluntarily placed in business rescue. (Should that not happen, Solidarity’s prior application that SAA be placed in business rescue, which was launched on November 21, would be heard in court on December 13.)
“This is a historic event,” highlighted union CEO Dr Dirk Hermann. “It is the first time that a public enterprise is placed under business rescue. The business rescue process also shows that mismanagement and plundering actually do have an end date – in this case at great cost.”
“However, this is not a voluntary business rescue process; it was enforced by Solidarity’s application,” he pointed out. “The government is now trying to obtain more control over a process they had been opposed to in the past.”
“Solidarity will request the other trade unions to jointly demand that organised labour should have an influence in the appointment of the business rescue practitioner,” he stated. “[W]e welcome the business rescue process. This is a victory for Solidarity and taxpayers.”
In a prior press release, issued on Wednesday night, the union had welcomed government’s then decision not to oppose Solidarity’s business rescue application for SAA. “We find the sudden turnaround very strange. They are probably now trying to obtain control over the process after they realised that Solidarity will succeed,” Hermann had said.