Workers of SAA hold placards during a strike over wages and job cuts at SAA headquarters in Kempton Park, SA, November 15 2019. Picture: REUTERS/SIYABONGA SISHI.
Workers of SAA hold placards during a strike over wages and job cuts at SAA headquarters in Kempton Park, SA, November 15 2019. Picture: REUTERS/SIYABONGA SISHI.

Trade union Solidarity is claiming credit for the decision to place ailing state-owned airline SA into business rescue and criticised the government for wanting more control over a process it was initially opposed to.

The SAA board of directors on Wednesday night adopted a resolution to place the loss-making airline into business rescue. The decision followed a crippling, eight-day wage strike by the National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca) in November, which cost the airline more than R50m a day.

SAA spokesperson Tlali Tlali said on Thursday that the decision was taken to create “a better return for the company’s creditors and shareholders, than would result from any other available solution”.

The company was also seeking to minimise the destruction of value across its subsidiaries including Mango, SAA Technical and Airchefs, “and provide the best prospects for selected activities within the group to continue operating successfully”, said Tlali. He said services operated by Mango would continue as usual.

“The board of directors will also announce the appointment of business [rescue] practitioners in the near future, and provide media updates as and when appropriate.”

However, in a media statement on Thursday, Solidarity COO Dirk Hermann said the decision to go the business rescue route was “the consensus between the legal teams of Solidarity, the SAA, the minister of public enterprises [Pravin Gordhan] and the minister of finance [Tito Mboweni] during a meeting with the deputy judge president of the South Gauteng High Court”.

Solidarity said that during the meeting, the airline undertook to ratify a resolution that the company voluntarily be placed under business rescue on Thursday, failing which Solidarity's business rescue application would be heard on December 13.

SAA has been placed in business rescue. Business Day TV spoke to SAA board member Martin Kingston for some insight into how this will affect operations at the airline going forward.

On November 21, Solidarity launched “a first-of-a-kind business rescue application in terms of section 131 of the Companies Act, no 71 of 2008, seeking an order to place SAA under supervision and to commence business rescue proceedings”.

“This is a historic event. It is the first time that a public enterprise is placed under business rescue. The business rescue process also shows that mismanagement and plundering actually do have an end date — in this case at great cost,” said Hermann.

“However, this is not a voluntary business rescue process — it was enforced by Solidarity’s application. The government is now trying to obtain more control over a process they had been opposed to in the past.”

Hermann said they would ask other trade unions to jointly demand that organised labour have influence in the appointment of the business rescue practitioner.

Earlier on Thursday, Gordhan announced that SAA would get R2bn in cash from the Treasury and another R2bn loan guarantee to raise finance from commercial banks to facilitate the business rescue process.

Numsa spokesperson Phakamile Hlubi-Majola said: “We have noted the media reports on voluntary business rescue at SAA. Numsa and Sacca will respond in detail to these new developments. We will advise media houses once we have consolidated our position”. 

mkentanel@businesslive.co.za