Picture: Rogan Ward/Reuters/African News Agency (ANA) Archives
Picture: Rogan Ward/Reuters/African News Agency (ANA) Archives

Embattled SAA's future remains in doubt

By Siviwe Feketha Time of article published Apr 16, 2020

Share this article:

Johannesburg - The future of the cash-strapped SA Airways remains in limbo as it battles to secure funds for its continued operations and financial survival.

The heavily-indebted national carrier is currently tasked with the ferrying essential cargo, including Covid-19 medical supplies, from across the world and repatriation of stranded South Africans in different countries during the current national lockdown.

Its appeal for R10billion funding was rejected by government, with Public Enterprises Minister Pravin Gordhan indicating that the government had no money to assist the ailing airline, which was currently under business rescue.

The rejection was set to also set in motion the retrenchment plans which were put in abeyance by the business rescue practitioners, Les Matuson and Siviwe Dongwana, and which have been strongly opposed by the union organising in the aviation sector.

Yesterday, Numsa general secretary Irvin Jim said the union was yet to respond to the decision by the government to decline the request for additional financial support from the business rescue practitioners.

The unions have been vocal in calling for the government to provide necessary financial assistance to the airline to avoid job losses and possible liquidation of the airline.

SA Cabin Crew Association president Zazi Nsibanyoni-Anyiam said the union’s leadership was meant to meet yesterday to discuss the crisis and its implications.

“We still going to caucus about what our firm position is,” Nsibanyoni-Anyiam added.

In the letter sent to the business rescue practitioners on Friday, Gordhan pointed out that the government would not be granting any form of financial support to the airline to sustain the business rescue process beyond the R3.5bn it provided as part of the post -commencement finance.

“Further to this, please note that neither will lending guarantees be provided in respect of the business rescue process.

“The advent of the Covid-19 pandemic has further stretched national resources in the government’s effort to mitigate the impact on the health of our people and on economic activity,” Gordhan said.

He pointed out to the business rescue practitioners that the pandemic had devastated the airline industry across the world and that they had to consider their options within the resources that were currently available to them.

Aviation economist Joachim Vermooten said the government had to fund SAA together with other private airlines that were set to experience operational challenges as a result of their grounding in the past month.

“Across the world, governments are giving financial aid to airlines on the basis that they need proper airline networks for a functioning economy. The grounding of the airlines was done in response to the government regulations.

“It was not a voluntary grounding but was enforced on the airlines,” Vermooten said.

He said the funding of airlines had to be proportionate to their market share and exposure.

He said the unions would, however, have to be more pragmatic and accept that job cuts were inevitable in order to save the airline, whose woes were worsening under current economic conditions.

“It is very clear from the economic perspective that there has to be significant retrenchments, unfortunately. The impact of the restart after Covid-19 means economic productivity will also be at a lower level than even the BRPs envisaged. This requires proper assessment by unions,” he said.

Dongwana and spokesperson Louise Brugman could not be reached at the time of publication.

Political Bureau

Share this article: