The long-awaited SAA Business Rescue Plan has been released. The plan by Business Rescue Practitioners suggests a restructuring that will result in job losses to 78% of the airline’s employees.
It also puts the state’s bill for settling SAA’s current liabilities and funding the restructured airline at R26.7 billion. This amount includes R16.4 billion allocated in February to pay off government-guaranteed debt and interest over the next three years.
According to the final SAA BRPs business plan released this week, the hovernment will need R26.7 billion to settle SAA’s current liabilities and funding for the restructuring plan. The plan was released a day after the June 15 deadline. The BRPs were granted in their fifth extension since December 2019.
Aviation expert Linden Birns says, “The Business Rescue plan really remains an academic exercise until creditors and govt have approved it and second of all until we see money if any at all treasury and the country are avel to put on the table when the finance minister presents his budget. The big question about this plan is how is it going to be funded. and nobody knows what the market demand is going to be like for air travel in the coming two to three years…”
George Nell is a Business Rescue Restructuring specialist. “Usually a business plan is published within 25 business days after the appointment of the BRP’s but they can ask for extensions. Government is in for a lot of money here and would like this thing to succeed. Now going forward the BRP’s must convene a second meeting of creditors within ten business days but that meeting can be postponed from time to time to consider the plan. But at this second meeting, they can debate the plan and everybody can make some suggestions and changes and can go on with those changes. Any votes of changes for the plan must be adopted by 75% of the independent creditors voting.”
SAA’s recovery plan published:
Nell says this is the only opportunity government, creditors and stakeholders will have to propose the necessary changes on the future SAA.
Nell says the plan can still be changed. “British Airways and Germany have assisted their national carriers and saying to this country the government should not assist. The plan was only published last night and we must still study the plan in detail to see if it will stand the test of time. and to give a professional opinion on the plan. We need a national plan to be internationally recognised as a national force or regional force at least and this is part of the process. I don’t think you can run SAA or any aviation-based business for a profit in the next few years.”
The rescue plan is expected to gradually come into operation from June. There will only be domestic and the routes that will be retained are Cape Town, Durban, and Port Elizabeth, with six aircraft in its fleet until February 2021.
The plan proposes to retain 1 000 members out of the current 4 622 domestic employees.
The cost for workers’ voluntary severance packages is set at 2.2 billion Rand. And the government says it will assess the Business Plan because it is concerned that it might not have been adequately accomplished — despite the resources the airline received.
In a statement released this week, the government said it supported the business rescue plan. Unions are yet to respond to the 100 pages published business plan.