More than six months since troubled South African Airways (SAA) went into voluntary business rescue, the plan to restructure the airline has been given the green light by 86% of its creditors.
According to the Companies Act, a vote in favour of a rescue plan requires 75% of the voting interests in order to pass.
The ball is now in government’s court regarding whether the business rescue can come into operation and be fully implementable now that the approval of the plan has been settled and the majority of employee unions and non-organised staff have endorsed it.
The airline’s restructure has been costed at R10.4 billion, in addition to the R16.4 billion that government has set aside to pay guaranteed debt over the next three years.
National Treasury recently said that there is no additional money to fund SAA, leaving the question of where funding will come from unanswered.
Business rescue practitioner (BRP) Siviwe Dongwana said the government has informed them that it is in “full support of the plan and is committed to raising the requisite funding”.
“In this regard, a letter will be delivered to the BRPs tomorrow,” said Dongwana. July 15 is the deadline outlined in the business rescue plan.
Government has welcomed the vote, saying it would provide a “much better outcome for creditors and SAA employees than liquidation”.
“In supporting the plan, the government is committed to mobilising the necessary resources to fund the transition. This includes the Voluntary Severance Packages (VSPs) agreed with the unions, and meet[ing] the minimum requirements of the Labour Relations Act and Basic Conditions of Employment Act,” said the Department of Public Enterprises (DPE) in a statement.
Acting CEO named
Earlier in the day, DPE acting director-general Kgathatso Tlhakudi announced that SAA chief commercial officer Philip Saunders has been appointed acting chief executive of the new airline that is expected to come out of the rescue process.
Eighty-eight percent of creditors voted in favour of the amendments, the largest being the retention of an additional 1 000 employees on a 12-month training layoff scheme.
Tlhakudi added that a new board will be announced in the coming days.
“The department in the coming days will be announcing the interim board of the new SAA. The interim CEO 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],” he said.
Strategic equity partners
On the issue of potential funding, Tlhakudi said the SAA coming out of this restructuring process has proven to be attractive to potential investors and strategic equity partners.
“This has been reflected in the approaches that government has received from local and international investors and players,” he said.
Tlhakudi also said on Tuesday that government is in the process of concluding the appointment of a transaction advisor to tie up the initial engagements that government has had with prospective strategic equity partners (SEPs) and in “not too long a time we should announce the preferred SEPs for SAA group and its various business units”.
“The new SAA will be a worthy partner to those that choose to support the process that is represented by the business rescue plan that [was] put before the creditors committee this afternoon,” he added.
“We are saying to competitors, business partners, suppliers, and customers represented in this room that your patience in the process that has taken seven months so far shall be rewarded by better business going forward.”