· A majority of creditors of South African Airways (69%) voted to postpone a meeting on a proposed rescue plan until 14 July, despite the business rescue practitioners pleading that delaying the meeting could have a detrimental impact on the airline
· The plan gives 15 July as the deadline for the government to come up with about R10.3 billion in funding to prevent SAA from having to be liquidated
A majority of creditors of South African Airways (69%) voted to postpone a meeting on a proposed rescue plan until 14 July, despite the business rescue practitioners pleading that delaying the meeting could have a detrimental impact on the airline. The plan gives 15 July as the deadline for the government to come up with about R10.3 billion in funding to prevent SAA from having to be liquidated.
Three unions, namely the National Union of Metalworkers of South Africa (NUMSA), South African Cabin Crew Association (SACCA) and the SAA Pilots Association (SAAPA), pressed for the adjournment. They wanted more time to propose a better plan and to engage with the government to get the commitment for funding.
The government has supported the proposed plan. According to the rescue practitioners, the R10.3 billion funding plan is the limit the government can consider raising. Finance Minister Tito Mboweni did not allocate any funds for SAA in his supplementary budget presented recently. Therefore the funds have to come from the private sector.
The proposed rescue plan has the following components, among other things.
· A R2 billion to get the airline operational
· A dividend of 7.5 cents in the rand to concurrent creditors (total of R600 million)
· A provision to keep1 000 of the 4 700 employees
· The rest will be paid severance allowance at a cost of R2.2 billion
. NUMSA and SACCA welcomed the adjournment granted. They feel that the proposed plan was inadequate and would have resulted in SAA being liquidated.
In the event of the plan not adopted and there is no amended plan adopted; or if the plan is adopted but government cannot raise the money; it will result in the practitioners having to make a decision on whether a rescue plan has now become unimplementable and if they should “discharge” the rescue process. This could ultimately mean liquidation of the airline.
The national airline went into business rescue in December last year, following years of losses and repeated state bailouts. SAA’s financial losses totalled more than R10 billion over the past two years, according to documents submitted to Parliament earlier this year.
