Government to oppose court applications against SAA Business Rescue Plan 

22 June 202

The Department of Public Enterprises (DPE) was notified of a court application by SA Airlink aimed at interdicting the Business Rescue Practitioners (BRPs) from convening a Creditors meeting to vote on a business rescue plan for South African Airways (SAA).

The application by SA Airlink also seeks to have SAA placed under provisional liquidation.

The department is also aware of plans by the National Union of Metalworkers of South Africa (NUMSA) and the South African Airways Cabin Crew Association (SACCA) to interdict the Creditor’s meeting through the courts.

The DPE has not been cited as a respondent in the SA Airlink application. However, as the Shareholder representative, the DPE will approach the court seeking to intervene with the intention to oppose the application by SA Airlink. The DPE will also oppose SA Airlink’s application that SAA be placed under provisional liquidation. SA Airlink contends that there is no reasonable prospect of rescuing SAA.

As we approach the final week to either endorse or reject the business rescue plan by the BRPs, 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. The question is why? Is this really in the interest of SAA workers or the fiscus?

The BRPs have scheduled a creditors meeting for 25 June 2020 to vote on the business rescue plan. Should NUMSA and SACCA launch an application to stop the creditors meeting, DPE will oppose the application.

Government, as the sole shareholder of SAA, supports the business rescue plan where it results in a viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services.

The DPE further supports the provisions of the Companies Act, which prescribes that the primary function of a business rescue process is to develop and implement a rescue plan with the view of fundamentally restructuring the business affairs and other liabilities of a company in distress, in a manner which maximises the likelihood for it to continue to exist on a solvent basis.

For this reason, the government has made funds available to the BRPs - R5.5 billion to augment the revenue of SAA - to develop a detailed business rescue plan, to consult with creditors, other affected stakeholders like employees, the Shareholder and the Board and management of the company under business rescue.

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 COVID-19 pandemic on this situation.

Issued by Sam Mkokeli on behalf of Department of Public Enterprises, 22 June 2020