What is public enterprises minister Pravin Gordhan up to? What kind of rabbit could he possibly pull out of the hat in the next three days? That will be the question from anyone who has been following the conflicting statements about SAA over the past couple of weeks.
After a decade in which the airline — one of the most potent symbols of the mismanagement that characterised former president Jacob Zuma’s rule — posted more than R32bn in losses, its business rescue practitioners seemed to have come to the most logical conclusion. It was not a radical finding as it was long established that SAA was not viable.
Once this crisis is over, SA will still need an aviation industry
With the government having refused to grant more funding, what was left to do was a managed winding down of the business with the hope that an eventual sale of assets would at least result in workers getting severance pay and creditors getting paid.
It’s not surprising that the SAA trade unions found the plan unacceptable, just as they have with every potential solution Les Matuson and Siviwe Dongwana offered. The ill-mannered statement that came out after the release of that last plan could have been expected.
The real bombshell came on Saturday when the public enterprises department again intervened and sought another week for an alternative plan that would work towards a “national asset which is internationally competitive, viable, sustainable and profitable”.
It wasn’t the first time the government suggested there could be a replacement airline for SAA. This one saw a future for the airline itself where it would be saved and be a “shining torch to a new world post Covid-19 in which SAA is a key catalyst for investment and job creation”.
But when one looks at the state of the aviation industry globally and the outlook for players that were until recently performing reasonably, it’s hard to see what plan Gordhan can come up with, especially in the time frame, that can save an airline that has been walking dead for a decade.
India’s SpiceJet reported a profit for the last quarter of 2019 and said its biggest problems would be oil prices and costs associated with the grounding of the 737 Max Boeing aircraft. Since it issued its financial report in February, the world has changed and it is now fighting for survival, having put more than half its workforce on unpaid leave.
Virgin Atlantic, owned by billionaire Richard Branson, is on its knees, begging the UK government for a bailout that media organisations such as the Financial Times put at about £500m. Virgin Australia has gone into voluntary administration, similar to SAA’s business rescue process, when that country’s government refused to give it a loan. Having a shareholder base that includes China’s Nanshan Group, Singapore Airlines and Etihad Airways hasn’t been enough to shelter it.
Closer to home, Ethiopian Airlines, Africa’s biggest and most successful airline that has been previously spoken of as a potential equity partner for SAA, has gone from an optimistic view of its prospects in early March to now having its CEO, Tewolde GebreMariam, talk about a fight for survival.
It is in this context in which the department said it and the unions had agreed to a new beginning and potential “strategic equity partners”.
Make what you may of it, and we wait, not with too much anticipation, for what will come on Friday. What we know is that the government has no money to bail it out and none of the big global players will have an appetite or the ability to take it on, even if we paid them to take the airline off our hands. Opportunities for that have come and gone, sacrificed on the altar of ideology or state capture.
Once this crisis is over, SA will still need an aviation industry and a discussion on what this will entail is coming. Whether SAA is part of that future is another question.
Gordhan really better pull something out of the bag, otherwise this will smell like a cruel game of stringing workers along. The country has big enough problems to deal with without the continued farce about SAA.