A vote to accept or reject South African Airways’s (SAA) rescue plan is due to take place on Thursday, but not without hurdles.
Competitor SA Airlink has approached the court for an urgent interdict of the creditors meeting pending the completion of a separate application to place SAA under provisional liquidation saying the airline’s rescue has no reasonable prospects of success.
This was revealed by the Department of Public Enterprises (DPE) on Monday which said while it was not cited as a respondent in SA Airlink’s papers it would oppose the application as the shareholder representative.
Business rescue practitioners Les Matuson and Siviwe Dongwana said they would oppose the application as well.
SA Airlink is a creditor of SAA whose payments could be compromised by the business rescue process. When the airline was placed under business rescue SAA owed SA Airlink hundreds of millions which it says should have been paid to the airline by December 2019.
The money comes from ticket sales that were conducted on behalf of SA Airlink by SAA, now the R500 million debt has been treated as pre-commencement debt in the final rescue plan.
The proposed hearing date is June 24.
No easy victories
SAA’s BRPs released the airline’s final rescue plan last week. The plan requires the government to commit to raising R10.3 billion in new money towards the establishment of a new airline. This is in addition to the R16.4 billion that the government has already set aside to pay off guaranteed debt and interest in the current airline.
It has taken the BRPs six months to develop this rescue plan after delays in funding, Covid-19 and wrangling with the government and labour contributed to delays which resulted in the BRPs receiving five extensions on its deadline.
The DPE said it was also aware of the National Union of Metalworkers of South Africa (Numsa) and the South African Airways Cabin Crew Association (Sacca) plans to interdict the creditor’s meeting through the courts. It also intends to oppose this.
“As we approach the final week to either endorse or reject the business rescue plan it is disturbing that a competitor of SAA, which is 100% privately-owned, as well as two labour unions, who should be acting in the best interest of their members, are seeking to destroy SAA by forcing a liquidation through the courts,” said the department.
“The question is why? Is this really in the interest of SAA workers or the fiscus?”
The creditors meeting is due to take place a day after Finance Minister Tito Mboweni delivers his supplementary budget on June 24.
Government funds are already strained due to the demands brought on by the Covid-19 pandemic that led to the government responding with a R500 billion economic and social support package, of which R130 billion will have to be funded through reallocations from the current fiscal framework.
“The government is committed to supporting a competitive, viable and sustainable national airline and wishes to engage constructively towards the national interest objective of such an airline in a constrained fiscal environment, taking into account the impact of the Covid-19 pandemic on this situation,” the department stated.