SAA creditors have voted to adjourn until July 14 the online creditors’ meeting called to vote on the business rescue plan (BRP) for the airline.
Creditors voted 69% for the adjournment, called for by three trade unions that are also rejecting the plan; Airlink, supported by other creditors including SITA, Sasol, Tourvest tourism group and International Aero Engines (IAE); and IT company DXC Technology.
The National Union of Metalworkers of SA (Numsa), the SA Cabin Crew Association (SACCA) and the SAA Pilots Association (SAAPA) proposed that the meeting be adjourned until July 14 and that the current BRP be amended and republished no later than July 7. The other applicants didn’t propose a new date for the meeting. The business rescue practitioners (BRPs) opposed the motions saying it would detrimentally impact SAA and unnecessarily delay Government funding for the rescue plan. The BRPs argued they had already responded to legal issues raised by Airlink, which had also been the basis of yesterday’s court hearing that was struck off the roll.
The adjournment may affect a July 15 deadline for Government to provide written assurances signed by both the DPE and Treasury that requisite funding will be provided.
Earlier in the meeting it became evident that SAA employees are divided about the plan: Numsa, SACCA and SAAPA – together representing 58% of employees – plus non-unionised staff said they rejected the plan; while the SA Transport & Allied Workers Union (SATAWU) and the National Transport Movement (NTM) supported it, while non-unionised management expressed “reluctant” support for it.
The three unions rejecting the plan argued that it was deficient in terms of the Companies Act and labour law, unfeasible as it would meet further legal challenges in its current form, that it targeted workers and trade creditors, and didn’t contain all necessary information. They also questioned the BRPs’ fees and alleged the plan was contradictory regarding Section 189 retrenchment proposals.
In order for the plan to be approved, 75% of creditors have to give it the thumbs up. Lenders make up more than 62% of the voting interest, while the travel trade make up a mere 0,061%, despite involving 14 companies, together owed almost R13m. As concurrent creditors, travel agencies will receive a mere 7,5 cents in the rand to be paid over three years, while lenders will receive a full Government guaranteed pay-out of R16,4bn over three years, while the Development Bank of SA will be paid out R3,8bn in the 2020/21 financial year.
During a question and answer session, Ntlhane Makena, the lawyer representing the BRPs, said the plan had the support of government and that “the funding requirements for the plan are at the threshold of what government can afford at this point”. He said: “Should there be a requirement to amend the plan, the funding impact of that would have to be considered. If not adopted, whatever we come up with may be un-fundable. The plan would then be un-implementable.” He said the BRPs did not envisage that further funding from lenders would be required, but that it was government’s purview to source further funding. “They have to put it to the main funder and it is up to the funder to arrange it,” he said.
BRP Siviwe Dongwana said government would raise R26,9bn in three tranches: R18,7bn including R16,4bn of loans payable to lenders, R600m to pre-commencement creditors and R1,7bn to aircraft lessors. Next would be R5bn including R2,2bn for the employee retrenchment package, R800m for post-commencement creditors, and R2bn for start-up working capital. The third tranche of funding would be for the unflown ticket liability of R3,2bn. This would not be an immediate cash pay-out to ticket-holders but would be funded from start-up working capital and reimbursed through refunds and vouchers, he said.