SAA: Government and labour agree to work towards new airline

As SAA retrenchments put on pause for one more week
Minister of Public Enterprises, Pravin Gordhan. Still no mention of funding. Image: Moneyweb

The Department of Public Enterprises and South African Airway’s (SAA’s) business rescue practitioners (BRPs) have agreed to give labour an extension to accepting severance packages until May 1. 

Following a meeting with organised labour and senior government officials on Saturday morning, Minister Gordhan said that parties had agreed to finalise a “leadership compact”.

This compact commits the department and unions to work together towards a “national asset which is internationally competitive, viable sustainable and profitable,” said Gordhan in a statement.

“The leadership recognises the enormity of the challenge but are unequivocally committed to saving SAA and shining the torch to a new world post-Covid-19 in which SAA is a key catalyst for investment and job creation.”

Creditors and unions were told by the BRPs Les Matuson and Siviwe Dongwana that a structured winding down of the business was dependent on the conclusion of retrenchments by April 24, failing which, the company would go into liquidation. 

Unions and non-unionised employees where presented with a termination-of-employment agreement on April 17, after the state refused to extend further funding or provide guarantees against foreign lending in order to sustain the rescue process. 

With no revenue from flights due to the lockdown, the BRPs said the company did not have enough money to cover a significant portion of due salaries beyond April. Matuson and Dongwana said the only way to salvage parts of the business and develop and publish a new business plan was dependent on retrenchments being concluded. 

Severance packages would be funded from the sale of select assets which would take six or 24 months. 

Read: SAA cannot pay salaries beyond April

Read: Government meets with SAA unions, and there’s still no money for the airline

SAA 2.0

The BRPs and employees moved the initial deadline to 12pm on Saturday. 

A letter sent to organised labour by Public Enterprises Minister Pravin Gordhan on April 25 states that a moratorium has been placed on the retrenchment of employees and employees are no longer obliged to sign the collective agreement. 

This document explains how employee claims would be treated under a structured wind-down process or liquidation.

The letter made no mention of funding but the idea of a new revitalised airline coming out of the rescue process is gaining momentum. 

Government’s commitment to this was first mentioned after an inter-ministerial committee on SAA made up of chair Pravin Gordhan, Labour Minister Thulas Nxesi and Tourism Minister Mmamoloko Kubayi-Ngubane met with labour to talk about the mass retrenchments proposed at SAA. 

Read: Unions respond to SAA severance package offer

On Friday the idea resurfaced during Finance Minister Tito Mboweni’s briefing on government’s R500 billion support package for an economy ravaged by Covid-19. 

Speaking on what the future of the economy will look like Mboweni supported this notion of “starting a new airline altogether from the ashes of [SAA]”. 

The saga continues

In a statement, the National Transport Movement (NTM) said the BRPs would be meeting the minister on Sunday to speak about the risks that come with delaying the rescue process without any funding.

The DPE will also meet with individual labour representatives to hear their submissions for possible incorporation in the final business rescue plan over the coming week.

“It must be noted that the minister reiterated that SAA is bloated, and that job losses were inevitable but it is upon the entire leadership of SAA in their respective levels and formations to mitigate and minimise job losses,” said NTM president Mashudu Rapheta said.

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Just do the summary firing thing.

This oke is also operating way past his expiry date !!!!!!

Agreed. He may be anti-corruption but his ideas are stuck in 1960’s communism. He believes SAA must play a “developmental role” and create jobs, service the African continent etc. By contrast a true capitalist would ask one question: does it make a profit?

Yes.

He is constantly interfering. The other ministers are also useless communists.

Is it even legal for them to interfere in a BR process?

At the rate this guy is going he will do more damage to this country than the Gupta’s. He is so stubborn that at his age one might start wondering if he is still medically fit to make any decisions.

If they cant control him lock him up man.

TSK!

“This compact commits the department and unions to work together towards a national asset which is internationally competitive, viable sustainable and profitable.”

And what exactly have you been doing for the past 25 years?

Uncompetitive, unsustainable, unprofitable………….an unholy alliance.

It may be hope for SAA and its employees, but it is despair for the poor taxpayers and other honest airlines trying to compete against this zombie.

Here’s how to do it. Start a new airline from the ashes of the old. Employ all of the old staff at higher salaries and mothball flights for a year or two until the world is flying again.

Blame it all on covid 19

Not all staff, though. Only those of the correct hue.

here we go again. Building a new pit to throw billions into.
Why can we not get rid of this idiot and his whole department

If at first you fail to get your unfair share – rinse and repeat.

Does the Minister have a legal advisor that has studied how business rescue works????

This is NOT how things run. Has he not now just assumed liabilities on behalf of taxpayers?

“The leadership recognise the enormity of the challenge but are unequivocally committed to saving SAA and shining the torch to a new world post Covid-19 in which SAA is a key catalyst for investment and job creation”

Oh ye gods, is this zombie NEVER, EVER going to die? This is worse than covid-19.

Who is running the show – Gordhan or BRPs? This rescue process is fake! And how much do the banks stand to lose at THIS critical point when their risk due to the virus is tenfold the normal?
The banks deserve to get 10c / Rand for years of reckless lending – except Future Growth

The Banks will lose Zilch : its all guaranteed by the Govt thus you and I :
Maybe a special tax on the few taxpayers can be raised : As Richard Branson once said to British Airways :” The Govt cant keep it up “

SAA is like a cockroach – it just doesn’t die.

Can the commies just stop performing CPR on it with OUR TAX MONEY!!

The clowns are sensing that their giant ATM’s may disappear. Just a day or two more please, after all what will we do when they are gone. Steal is all we know.

the same old story…SAA wants money…Gordhan says no..and a couple of weeks later gives then what they want.

CR speach of a new economy after the virus anyway sounded like what Mandela said in 1994. Clueless, just wait for the next unemployment and liquadation stats.

Be careful when investing in SA. No growth part of the world

Creditors need to go to court to force payments and get liquidation done.

Can’t while in business rescue

Can’t they get a court to force the finalization of business rescue?

Cosatu is an alliance partner of Ramaphosa and helped get him into the presidency, alongside the SACP. These bodies represent labour, hence the problem.
The liquidation of SAA also will help cancel all corrupt tender deals over the years and hide them forever. The aviation fuel contracts etc.
Martin Kingston just recently resigned from SAA, where was his strong voice while he was on the board of SAA. He is now chairman of BUSA and seems to have a lot to say. Voice back.
The problem that they have is that their alliance partners need to be seen to be representing labour. There lies the problem.
Lastly people have forgotten that Ramaphosa was chairman of the SOE’S in government as Deputy President until 2016. where was his strong voice?

It is like Martin Kingston and the Rothschilds gave a grace period for corruption up until certain ratios got breached, which is starting to happen quick that expected.

Agree. Ramaphosa is a mirage. There is simply a total lack of ability to turn away from the proven failed socialist policies. They are in for a massive shock when they see the amount of money SARS will collect this year and next year.

Then it will be time for a “wealth tax”; primarily aimed at whites and benefiting the ANC elite.

Gordhan must be smoking something (not illicit cigarette’s)! What is he talking about SAA is internationally competitive and profitable – does he not understand accounting? Maybe because they loose less than other airlines (not many) he thinks that’s competitive. His communist thinking is clear to see.

Perhaps these commies, who have all the answers to all economic problems, should put in an offer for Branson’s Virgin Australia, combine it with SAA and show the world how it’s done – just give them a second chance, a second chance, a second chance, ….. ad nauseam. Proviso should be that union and government leaders (including the State Capture beneficiaries) put their personal funds on the line, not SA taxpayers’ money.

This compact commits the department and unions to work together towards a “national asset which is internationally competitive, viable sustainable and profitable,” said Gordhan in a statement.

So you are tacitly implying that it is none of these, and has not been for many years. Explain then why billions have been poured into SAA knowing full well that it was essentially a basket case. Let’s not forget that many of the bailouts took place while Gordhan held positions in government that had direct oversight of what was going on. Why was he not shouting from the rooftops then? But hey, how dare I question the credibility of “one of the good guys”.

I guess this should not come as a surprise. Same old, same old. What it will reveal is CRs resolve to fix things or is he going to give in!!?? If the latter then all his anti-corruption talk, safe guarding the recent borrowings from Lootuly House etc. , etc. will just be blah blah fish paste at which point we will be truly dead and buried as a nation. Rich and poor alike!!!

Putting a communist in charge of cleaning up the SOE’s is not a smart move. Under Gordhans watch, SA’s debt pile went up 20% of GBP all the way up to 80%. The guy has cost our country many hundreds of billions. Its pure insanity to have him close to any budget decision making. We need tough leaders who will do what’s right for the long term interests of the country.

SA is alleged to be the most unequal society in the world. How about a referendum among the all the “unequals” asking if they prefer government to spend (or more like pour) money on a new national airline or build more basic houses, schools, clinics and recreation centres for the unequals living in squatter calms and rural areas. There’s no need to ask taxpayers (the equals) because there is no doubt they would return a resounding no to the question of wasting tax collections on SAA. SAA employees and vote / rent seekers in government are the only ones who would vote in favour. Prove me wrong CR!

Since there will be negligible passengers and ticket sales for at least 6 months – 1 year, the new airline will be “Virtual Air” and all the staff will be able to work from home, a slight variation of the numerous caught-out D-Gs and other deployed cadres who get suspended on full pay while their disciplinary hearings follow the stalingradual “let the law take its course” route..

In other words the ANC will just loot from the poor on behalf of another bunch of unionists. Corruptheid continues.

They have R500bn to waste so no surprises here.

After all, what’s a meagre R5 billion to maintain your delusions when R500 billion is on its way to you?

It is incredible how so many ‘ so called leaders’ just don’t lead and tell it as it is.

Does this mean the old airline – SAA – is finally put into liquidation and all contracts terminated and then start a new one called say SAA2 or does it mean trying to resurrect the existing SAA?

Nevertheless it is sad to see how cavalier the ANC is with the people’s tax money, especially at a critical time like this.

Fire Pravin Gordhan

You can’t have a business rescue process and then have Pravin Gordhan interfere the whole time – what’s the point of business rescue then if Pravin Gordhan still wants to call the shots?

They’ve had 10 years to fix SAA, just kill it

If you want to create jobs, ask people to dig holes and others to fill it up again, it’ll be cheaper than SAA and create more jobs

Even the communists will call this crazy. Much cheaper to pay the workers to stay at home or even to give each a holiday home by the sea. These comrade workers are not even made to keep themselves fit.

Communist cake. Please take Pravin Gordhan and leave him back at tax and let a proper businessman like Koos Bekker take over!

Hone grown debt trap that is making south africans poorer and poorer.
Shut it down.

Just a big excuse to loot when government,labour and business (wmc)
collaborate.

Gordhan evolving into a pathetic character.

The time to be bold is now. Grow a pair and drain the swamp.

End of comments.

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