Only business rescue can save SAA – Solidarity

Trade union Solidarity believes the only way to rescue the financially haemorrhaging South African Airways (SAA) is to have it placed under forced business rescue, but says it expects fierce opposition from government against their historical court application.

If the application succeeds, SAA will become the first ever state enterprise to be placed under business rescue and it could have implications for other ailing state entities such as Prasa and Eskom.

Solidarity’s chief executive Dirk Hermann said court papers in their application would be served next month and Solidarity would in the coming month campaign to obtain mandates from thousands of taxpayers to become part of the lawsuit.

A number of civil organisations have already indicated they want to join the lawsuit as friends of the court, but indications are that government and the SAA will oppose the application because of their view that SAA should remain in government hands.

The head of Solidarity’s research institute, Connie Mulder, says SAA had nine CEOs in nine years and almost as many turnaround strategies, without any positive results.

“SAA is repeatedly making the same mistakes while hoping for favourable results… The risk that SAA goes into total collapse is increasing by the day.

“The purpose of business rescue is to bring stability and sustainability to the company and the workers…. It’s not just workers’ interests that are at stake, but public interest too,” Hermann said.

The Auditor-General said in a report SAA had suffered a total loss of R5,6 billion in 2017 and expressed concern about the airway’s status as a going concern.

“Based on SAA’s financial statements we can see that since 2016 its operating loss had increased by 1 000 percent to R3,7 billion. Disturbingly, SAA recently advised Parliament that they would likely lose a further R5 billion in 2018,” Hermann said.

Mulder says SAA’s liabilities exceed its assets by R17,8 billion and it is totally dependent on government loans, which now total more than R30 billion.

If it was a private company, it would have been liquidated years ago, but Solidarity believes the airline could, because of its unique position, still be saved by putting it under business rescue, involving equity partners and partially or totally privatizing it, he says.

Solidarity has called on government to probe mismanagement at the airline and says it will also petition political parties and Parliament for a parliamentary debate about SAA.

Also read: SAA’s books are a mess, says A-G

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