South African Airways (SAA) is rising from the ashes again.
This follows after 86% of creditors voted in favor of the airline rescue plan. The meeting with creditors was held on Tuesday.
As more than 75% of creditors are accepted in favor of the plan, it will now be accepted under the Companies Act.
Now that the plan has been approved, the treasury will have to find R10 billion to make the plan a reality. The Department of Public Enterprises said in a statement on July 8 that the “government is committed to funding the necessary resources for the transition”. This is despite the fact that the Treasury has repeatedly said that there is no extra money that can be given to the SAA.
However, Kgathatso Tlhakudi, acting director-general of the department, reiterated during the meeting that the state supports the restructuring of the airline.
“It is important for the country and the region that the SAA will fly again,” he said. Among other things, he gave tourism as an example of why the national airline should be retained. Tlhakudi also said that the business rescue process is different from previous attempts to turn around the airline, given that there is now a sustainable plan on the table on what needs to be done
No extra money was also given to SAA in the supplementary budget of Finance Minister Tito Mboweni, which was presented to parliament on 24 June.
Tlhakudi, during his presentation, also said that Philip Saunders has been appointed acting CEO of the airline.
Tlhakudi says Saunders has a “credible record of leading airlines around the world.”
Saunders is currently the chief operating officer of SAA. He was previously employed by the International Air Transport Association (Iata).
Tlhakudi also said that the department will announce in the coming days who has been elected to the new interim board for the airline.
According to Les Matuson and Siviwe Dongwana, the business rescuers appointed by SAA, it will cost R26.7 billion to save the airline. Most of the money has already been allocated to SAA by the Treasury in previous budgets.
Now that the plan has been approved, it means that about 2,700 of SAA’s employees are now officially out of work.
The voluntary severance packages offered to employees consist of the minimum required by law – one week’s remuneration for each year worked – but will be calculated on the basis of salaries with a 5.9% increase which will be implemented retroactively word. The increase was negotiated in November last year, but not implemented because the airline went into business rescue in December.
Eventually, 1,000 workers will retain their jobs, while a further 1,000 will remain employed for a year during which they will participate in a skills program.
The SAA will now also get rid of a lot of its planes and routes.
Dongwana pointed out that there are now several conditions that must be met before the plan can be implemented.
He says he has received notice from the department that the state will no doubt support the plan and make the necessary funds available for the rescue of the airline.
The department has undertaken to send a letter to the business rescuers on 15 July confirming this undertaking.
Dongwana said shortly after the meeting adjourned, the business rescuers welcomed the decision.
“This is an important step forward for the airline and provides the much-needed security for a restructured SAA.”