How bankrupted SAA can be wound down and reborn – expert

Meanwhile, the Democratic Alliance (DA) has called for the immediate liquidation of SAA to save taxpayers’ money.

The business rescue partners who were appointed to save SAA have confirmed that the business rescue process and retrenchments will continue.

According to aviation expert Guy Leitch, the liquidation of SAA could cost roughly 9,000 jobs, which will be lost with very little hope of reemployment in the airline industry, which has been devastated by Covid-19.

“Most taxpayers welcome the prospect of no longer being slowly bled by the two state-owned airlines. But there is a huge cost in closing it down.

“Nine-thousand SAA group jobs will be lost. Further, much long-term damage will be inflicted on the already reeling South African economy through the lack of air connectivity provided by SAA to transport people and goods affordably,” said Leitch.

He said that the R16 billion provided in the February budget for restructuring was no longer on the table and government had failed to meet any of its promises to SAA since the start of the business rescue process in early December last year.

Leitch said the other option on the table was to split the airline into two, consisting of the old company with its debts and a new one with similar branding to provide the essential long-haul connectivity to ensure the foreign airlines that would try move into the vacuum created in the South African market would be kept honest.

“It will ensure that key tourism and trade routes are well served and that the revenue from ticket sales remains local. The best bits of SAA would be cherry-picked for continuation – its ‘Best in Africa’ customer service standards, its institutional knowledge and pilot training expertise, and its routes and slots at key hub airports, to name but a few,” said Leitch.

He added that a study by transport economist Joachim Vermooten on the Swiss lessons for SAA had concluded that “a planned closure and restart [or carveout] of a smaller and more focused successor state-owned airline is a better alternative than a sudden service interruption of SAA and the related economic impact”.

Leitch said: “There is no reason why, like Air New Zealand, Qantas or Latam, it cannot be profitable, with quality management, the correct route structure and sound labour and procurement contracts.

“It will be able to attract a private sector partner – preferably with a majority shareholder, to keep things professional and free of political meddling.”

Following the announcement by government that it would cut funding to SAA, DA MP and member of the standing committee on public accounts Alf Lees said the liquidation of SAA should not damage the economy and the wellbeing of innocent employees, who face loss of jobs.

“The DA calls on SAA’s business practitioners to proceed and apply for SAA’s liquidation with immediate effect. The R50 billion bailouts to SAA, since 2009, have come at a great loss to the taxpayer and the country,” he said.

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