Government open to bringing in strategic partners at SAA

 

Government’s plan for a new SA Airways (SAA) to emerge from the ashes could entail bringing on strategic equity partners to help the ailing airline.

In a statement on Friday responding to questions from Business Times, Kgathatso Tlhakudi, acting director-general in the public enterprises department, said: “We are open to the participation of strategic equity partners with regard to some of our SOEs [state-owned enterprises], including our airlines.

“Our approach would have also taken into cognisance the negative impact the coronavirus pandemic has had on aviation in South Africa and globally, and the country’s needs and strategic interests.”

The statement, which was highly critical of the role the airline’s business rescue practitioners had played since they were appointed in December, said the department had hoped the business rescue plan, which was due three months after the start of the business rescue process, “would be a way forward for the airline”.

Tlhakudi said the business rescue plan would have indicated “strategy, business model, route network, fleet plan, financial model and the organisational structure appropriate for the successful relaunch of the airline”.

He said the “realisation” of the new national airline could also have needed the “development of an optimised funding model to advise on possible funding sources”.

“We are aware there is a great interest in the market on partnering with SAA. We would have expected that these interests would have been assessed by the BRPs (business rescue practitioners) and with government advised accordingly.”

Tlhakudi said no business rescue plan had been presented “despite R5.5bn in post-commencement funding and over R200m in BRP and consultant fees”.

“Instead government was presented with a demand for an additional R10bn, which could not be supported.”

He said the government’s approach was “level-headed” and would take into account the effects of Covid-19 on local, regional and global aviation, as well as the need to “shore up the airline with world-class aviation leadership and capabilities”.

It would also be cognisant of the “requirement for an extensive local and regional network to support tourism, business and different sectors of the economy”, and the need to support the South African aviation industry and reduce “reliance on the fiscus going forward”.

Tlhakudi also said there needed to be “further appreciation of how mortally wounded” state-owned enterprises had been because of state capture and corruption.

“This is what the scourge does. It leads to the demise of legacies and loss of livelihoods, impoverishing communities from whom airline and supporting industries workers come from.”

Thlakudi said the government was “reviewing its options in all airline assets”.

“We will inform the public of further developments in due course.”

The business rescue practitioners declined to comment.

Meanwhile, the SA Cabin Crew Association (Sacca) and the National Union of Metalworkers of South Africa (Numsa) — which together represent about 60% of the 4,700 workforce at the airline — will be taking SAA and the business rescue practitioners to the labour appeal court next week.

This is part of attempts to get practitioners to withdraw or suspend their application for the Section 189 process, as well as the severance package contracts that are being offered to the workforce.

In terms of the offer on the table, workers had until 5pm on Friday to sign the retrenchment agreements. This followed an agreement reached between the government and the business rescue practitioners to hold off on the signing of retrenchment contracts until then. Previously the deadline was noon on April 25.

Feroze Kader, chief negotiator for Sacca, said on Friday the association and Numsa were “not dealing” with the business rescue practitioners but communicating directly with the public enterprises department.

“We have lost faith in the BRPs,” he said.

He said the unions had made more progress dealing with the public enterprises department directly in the past two weeks than “we’ve been seeing with the BRPs for the last five months”.

“We are happier dealing with the minister [Pravin Gordhan], other ministers and his people from the department because we see the light at the end of the tunnel for a version two of SAA.”

The business rescue practitioners declined to comment on the planned court action.

The practitioners, however, did say they were “continuing with the Section 189 process” and that 5pm on Friday was the cut off time for unions to engage with them.

By NICK WILSON

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