SAA creditors have voted overwhelmingly in support of the business rescue plan for the airline, giving the Treasury and the department of public enterprises until Wednesday to provide a letter of commitment that funding will be forthcoming. .
Domestic banks, which are the biggest creditors by far, hold about 60% of the voting power, with smaller creditors and employees holding only minimal interests. Banks are, however, guaranteed creditors and will be paid out in full by the National Treasury over the next three years.
SAA has been in business rescue since December 5 when lenders finally pulled the plug and refused to extend any further loans, even if government-guaranteed. Business rescue practitioners Les Matuson and Siviwe Dongwana, who had wanted to wind down the company, have bashed heads with public enterprises minister Pravin Gordhan for the past three months, eventually acceding to his insistence that the plan make provision for a restructured SAA, which will remain the national flag carrier.
But the plan depends on further funding from the fiscus to the tune of R10.4bn to restart the airline and settle various liabilities. The Treasury has indicated that it is unable to provide SAA with any further funding. The department of public enterprises has, nonetheless, pinned its hopes on a recent statement by the cabinet that it supports a restructured SAA.
The practitioners welcomed the approval of the business rescue plan with “an overwhelming majority”.
“It is an important step forward for the airline and provides the much needed certainty towards a restructured SAA,” Dongwana said.
In a statement to the meeting, the department’s acting director-general Kgathatso Tlhakudi said that the perception that SAA is a “vanity project” is not true. “The restructuring of SAA is a project that has been taken on behalf of the democratically elected government. The project has been reflected in some quarters as a vanity project of the department of public enterprises, or of the National Treasury — this is far from the truth. The re-emergence of SAA is good for the country.”
Tlhakudi said that the role played by SAA in the repatriation of South Africans and the importation of vital medicine during the coronavirus crisis, as well the airline’s role in tourism and regional integration, are among reasons why a state-owned airline is required.
He said that an interim board will be appointed soon and that Philip Saunders, SAA’s chief commercial officer, will become the acting group CEO.
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