Government agrees to fund SAA rescue, draft plan says
JOHANNESBURG - The government has agreed to fund a restructuring of South African Airways (SAA), if a business rescue plan for the struggling state-owned airline is adopted, a copy of the draft plan showed on Monday.
SAA entered business rescue – a local form of bankruptcy protection – in December, after which administrators took over the running of the airline and have been working on a plan to save the business.
The draft plan said the government had agreed to make a working capital injection, which the administrators estimated at not less than R2 billion, fund employee layoffs, which could cost up to R2bn, and make an allocation of at least R600 million towards the repayment of general concurrent creditors.
A spokeswoman for the administrators confirmed the draft plan was genuine.
The business rescue team on Wednesday warned they would not have the money to pay the salaries of all staff for the month, and dismissed suggestions from government they had not managed the costs of the operation well.
"A leadership compact forum comprising the department of public enterprises and all the unions and non-unionised bodies at SAA proposed that there be pay cuts for the month of May," Les Matuson and Siphiwe Dongwana said.
"However, SAA does not have sufficient funds available to pay salaries to all of its employees and, in fact, does not have sufficient funds to pay certain of its post-business rescue costs."
The business rescue team were granted leave to appeal a Labour Court ruling that set aside retrenchment notices sent to SAA's about 5 000 staff.
REUTERS / BUSINESS REPORT ONLINE