The path to the establishment of a new national carrier moved closer to fruition on Tuesday after creditors overwhelmingly approved SAA’s business rescue plan and the Department of Public Enterprises (DPE) named veteran aviation executive Philip Saunders as the airline’s interim chief. Photo: African News Agency (ANA) Archives
The path to the establishment of a new national carrier moved closer to fruition on Tuesday after creditors overwhelmingly approved SAA’s business rescue plan and the Department of Public Enterprises (DPE) named veteran aviation executive Philip Saunders as the airline’s interim chief. Photo: African News Agency (ANA) Archives

SAA closer to taking off as rescue plan approved by creditors

By Dineo Faku Time of article published Jul 15, 2020

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JOHANNESBURG – The path to the establishment of a new national carrier moved closer to fruition on Tuesday after creditors overwhelmingly approved SAA’s business rescue plan and the Department of Public Enterprises (DPE) named veteran aviation executive Philip Saunders as the airline’s interim chief.

The DPE said 86 percent of creditors backed the plan – 11 percent more than required – paving the way for the restructuring of the national carrier and the retention of more jobs despite a last-minute attempt by the SAA Pilots’ Association (Saapa) to scupper the process.

Saunders, SAA’s chief commercial officer, has his work cut out as he has to implement the airline’s reconfiguration into a new and viable carrier with fewer employees. 

The DPE’s acting director-general, Kgathatso Tlhakudi, said the DPE backed Saunders to take SAA out of its current turbulence, as he was an experienced airline executive with a strong commercial background.

“The interim chief executive for the airline will be Phillip Saunders, who has a credible track record of leading airlines around the world, and his last position before joining SAA was at the International Air Transport Association,” said Tlhakudi, adding that Saunders would work closely with a new interim board and management team appointed to implement a fundamental restructuring of SAA.

“In the coming days, the DPE will be announcing an interim board of the new SAA,” Tlhakudi said. 

SAA, which filed for voluntary business rescue after years of losses, was not allocated further funds in the emergency budget last month.  

This week, the department went on the offensive against the pilots, dismissing as excessive and greedy their  demands for more benefits from the proposed R2.27 billion rescue plan.

It said the benefits sought by Saapa for pilots were far more costly, lucrative and rewarding than any other class of employee at SAA. 

Yesterday, the DPE welcomed the vote and applauded the creditors and all stakeholders for realising that a new, restructured, competitive airline was the best option to take back to the skies and preserve the brand of a national carrier.

“The DPE believes that the favourable vote is a much better outcome for creditors and SAA employees than liquidation, and the government remains confident that the implementation of the business rescue plan will balance the rights and interests of all parties,” the DPE said.

The DPE said in supporting the plan, the government had committed to mobilising the necessary resources to fund the transition, including the voluntary severance packages agreed with the unions, and to meet the minimum requirements of the Labour Relations Act and the Basic Conditions of Employment Act.

“The priorities for the DPE are now to give effect to funding commitments by the government for the business rescue plan and appoint a new and reconfigured interim board for SAA,” said the DPE.

The department said it hoped that a new SAA could reclaim market share while fighting to compete more in the emerging-market space – notwithstanding the impact of the Covid-19 pandemic, which would constrain the aviation industry for some time.

Aviation expert and SA Flyer magazine editor Guy Leitch said the restructuring could make SAA profitable again. Leitch said the right changes would address poor management and corrupt procurement.

He said SAA could do with amending some of its unprofitable flight routes. Legacy problems with unsavoury suppliers also had to be addressed. “One example was that the airline was paying R17.50 for every bottle of water handed out, but that should have cost R2,” Leitch said.

BUSINESS REPORT

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