Cabinet briefed on SAA business rescue, DPE assures on anti-graft actions at airline

4th December 2020 By: Rebecca Campbell - Creamer Media Senior Deputy Editor

In a statement issued on Friday, the South African Cabinet reported that, at its virtual meeting on Wednesday, it had been briefed on the business rescue plan (BRP) for State-owned national flag carrier South African Airways (SAA).

In September the government committed itself to provide R10.5-billion to back the BRP for, and the restructuring of, the airline, although this was not formally confirmed until late October. (This was over and above the R6.5-billion that SAA had been allocated in the national Budget in February.)

In its statement, the Cabinet said that it had been briefed on the implementation of the BRP for SAA. It had also been assured that the allocated R1.5-billion would be used effectively, to ensure that the BRP was effectively implemented.

“Cabinet appreciated the progress and implored the Department of Public Enterprises (DPE) to hasten the implementation of key initiatives to ensure the emergence of a new restructured, efficient and tech-savvy national airline,” it affirmed. “The DPE was directed to finalise the appointment of the interim board for SAA and to conclude the appointment of the Strategic Equity Partner for the restructured SAA. [Low cost carrier] Mango was commended on the strategic role it played as an SAA subsidiary, to ensure the continued presence of the airline in the market.”

Also on Friday, but separately and independently, the DPE put out a press release affirming that it was “sympathetic and deeply mindful” of the situation in which SAA employees found themselves. They had not been paid for several months. Nevertheless, the DPE urged them to “be patient”. Officials of the department were working, in conjunction with stakeholders, “to find solutions”.

The payment of the employees’ salaries would be part of the restructuring process for the airline. This process was being developed by the DPE and the SAA business rescue practitioners. Progress reports on the completion of the BRP would be released when the information became available.

“In the past the DPE has worked with SAA management to restore good corporate governance and combat corruption at the national carrier,” assured the DPE in its statement. “As one of the key focus areas, SAA has looked into major contracts relating to logistics, information technology, transactional advisory services, ground handling and security. The DPE is aware that the airline took disciplinary steps against the employees implicated. This resulted in termination of employment for some senior and executive managers [involved] in misconduct. … All stakeholders, employees and union members are encouraged to come forward and provide credible information to the Department about instances of possible corruption, collusion, theft or fraud, that have occurred within the airline and amongst its service providers.”