Public Enterprises Minister, Pravin Gordhan, is to meet with SAA’s business rescue practitioners in the next 48 hours to iron out disagreements, gain consensus on the way forward and find funding for the airline beyond May 8.
“We intend to engage with the BRPs in a serious and constructive way so we can find the right way forward,” he told a joint video conference of the Public Enterprises Portfolio Committee and the Select Committee on Public Enterprises and Communication on Wednesday night (May 6).
The Minister disagrees with the winding-down process being proposed by the BRPs, saying it does not serve the original objective of the business rescue process. “We are adamant there should be no fire-sale of important assets of SAA, nor should there be any movement towards liquidation, when in fact there are many alternatives that can be pursued.”
The BRPs want to down all SAA cargo and repatriation flights from May 8 when SAA’s funding runs out, but Government expects SAA to continue the repatriation process and take advantage of income-producing cargo flights. There appears to be some flexibility about the date, if funds can be found.
Pravin accuses the BRPs of inadequately consulting with Government as shareholder of SAA, as stipulated in the Companies Act. He also alleges that they could have done more to save costs.
He wants them to account for how they have spent the post-commencement funding of R5,5bn in the last five months. He also wants access to R35m worth of work done by US firm Alvarez and Marsal, who the BRPs engaged as aviation consultants on the recommendation of the lenders. The Minister says the BRPs to date have also not produced required management reports for the Standing Committees on Public Accounts.
The DPE has called on the BRPs and all the consultancies they used to reduce their fees by 40% to help fund the business rescue process, but have not yet received a response. Some of the trade unions representing SAA employees have come to the party by agreeing to 50% wage cuts.
The Minister says DPE still does not know when the completed business rescue plan will be presented. “At best, what was given to us yesterday morning is an outline, but much of it is about history, (there is) not much of the solution.”
He says government wants to engage in a constructive manner with the BRPs about alternative routes for the business rescue process. “By that we mean we need to understand what the shape of the new airline should be.” He says the DPE has engaged Seabury consultants to design a model for the future SAA. Their proposal will be completed soon. “The one thing we must be absolutely clear about is that the old SAA will not exist in the future, because it was not competitive or viable, but also because the whole aviation and economic environment has changed significantly.”