DPE’s plan for SAA will see all employees retrenched with only 1,000 remaining

South African Airways's ability to remain solvent is being questioned in court.

The business rescue plan’s approval comes after squabbles between the enterprise’s department and unions.

Following approval of the SA Airways (SAA) business rescue plan on July 14, amid spats between the public enterprises department (DPE), unions and business rescue practitioners, the enterprises’ department said it was hopeful in bringing the process closer to finalisation.

SAA’s business rescue plan was approved in a majority vote, paving the way for the enterprise’s department to launch a new plan for the airline including pointing to Philip Saunders as new interim CEO.

About 86% of creditors voted in favour of the business rescue plan, meaning the airline avoided liquidation and that had an attempt to rehabilitate the distressed business.

Expecting to complete the process in four phases, the department hopes to restructure the airline, which includes implementing voluntary severance packages to employees.

This will be followed by; in no particular order, the appointment of non-executive directors and new management team, the selection and appointment of transaction advisors and the formation of a customer-centric airline designed to be lean, digitally modernised and agile to service all market segments.

About 1,000 employees will remain to start the new airline on different terms and conditions to those currently existing.

“The voluntary retrenchment provided in the business rescue plan will see the retrenchment of all employees with only 1,000 employees remaining to start the new airline on different terms and conditions,” the department said.

The DPE as a shareholder on behalf of government will appoint a smaller board of directors who will appoint the new executive management, including chief risk officer, a chief information officer and chief operating officer.

The business rescue plan’s approval comes after squabbles between the enterprise’s department and unions.

Both the National Union of Metalworkers of SA and the SA Cabin Crew Association have criticised the appointment of Saunders as interim CEO, saying Saunders lacked the needed experience and was part of the previous leadership which helped collapse the troubled airline.

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