75% votes needed ahead of SAA’s business rescue meeting today

Ahead of the South African Airways’ (SAA) meeting with its creditors to vote on its business rescue plan on Thursday, many wonder if the airline will be saved, liquidated or restructured.

75% in votes is needed to be carried in favour of the SAA’s business rescue plan, according to the department of public enterprises (DPE).

SAA was placed under business rescue on 5 December 2019 after it filed for bankruptcy. The airline has not released financial statements in two years and has not made a profit since 2011, relying on government bailouts to stay afloat.

The airline’s appointed business rescue practitioners (BRPs) Les Matuson and Siviwe Dongwana were required by the Companies Act to produce a business rescue plan with 25 days to present their business rescue plan to creditors.

However, the process was supposed to be finalised on 5 March 2020, which means their rescue plan is nearly six months overdue. The BRPs sought for an extension until 15 June after the court had initially granted the BRPs an extension on 8 June to present its rescue plan.

The BRPs who said the airline was out of cash, having spent the R5.5 billion given to it in post-commencement funding, had also intended to stop all operations from May 8. However, following discussions with Minister of Public Enterprises Pravin Gordhan, the decision was rescinded.

The idea of privatising SAA has been in conversation in recent months after the DPE opposed provisional liquidation of SAA.

On Wednesday, the DPE called on creditors and stakeholders of SAA to vote in support of the airline’s business rescue plan.

“Should creditors vote not to support the business rescue plan, SAA would face liquidation and they would receive substantially less for debts owed to them.

“There would be a loss of opportunities to provide the new airline with technical, financial, and operational expertise and overall future business partnerships and the severance benefits to retrenched employees would be capped across the board, regardless of years of service,” the DPE said in a statement.

This comes after the Pretoria High Court dismissed SA Airlink’s application to place SAA under provisional liquidation. SA Airlink claimed that the proposed turnaround plan for the airline was “a sham and a fraud on the creditors”.

The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (SACCA), who had planned to interdict the creditor’s meeting through court, welcomed the ruling by the high court.

Numsa spokesperson Phakamile Hlubi-Majola said saving state-owned-enterprises (SOEs) was in the interest of the country.

“It is in the interest of the country as a whole to save these entities and ensure their longevity, and workers should not have to pay the highest price for the failures of management. Likewise, it is better that all victims of the inadequate and flawed business rescue process at SAA should rather work together towards attaining the objective of a new restructured airline, under independent and competent management,” he said.

Hlubi-Majola said the proposed BRP’s plan would plunge workers further into the job-loss by retrenching more than 3,700 workers.

“This reckless act will deepen the unemployment crisis in South Africa. We must state that whilst we agree with Airlink on most of the issues they raised against the BRPs at SAA, we disagree with the remedies they sought, namely the liquidation of the airline,” he added.

It was reported that SAA employees would receive a capped severance settlement of R32,000 and lose all other benefits, should the airline be liquidated.

READ MORE: Public enterprises dept opposes provisional liquidation of SAA.

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