The Department of Public Enterprises (DPE) has urged creditors, employees and other stakeholders of South African Airways (SAA) to vote in support of the business rescue plan of the airline as it would result in a better return for these parties than a liquidation of the carrier. In addition, it is the only pathway for a rescue and restructuring of SAA.
As the shareholder on behalf of government, the DPE believes the approval of the business rescue plan would help creditors and employees to be co-creators of a new airline and ensure a strong base is maintained for the growth of the local aviation industry.
SAA Business Rescue Practitioners (BRPs) have scheduled a creditor's meeting for Thursday 25 June 2020 to vote on the business rescue plan. A vote in favour of the plan by 75% of the voting interests would be required to carry the vote.
The DPE believes a positive vote to finalise the business rescue process would be the most expeditious option for the national carrier to restructure its affairs, its business, debts and other liabilities, resulting in the emergence of a new viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services.
Should creditors vote not to support the business rescue plan, SAA would face liquidation.
As the Shareholder on behalf of government, the DPE has highlighted the disadvantages of the liquidation of the airline:
Creditors would receive substantially less for debts owed to them by SAA,
There would be a loss of opportunities to provide the new airline with technical, financial, and operational expertise
and overall future business partnerships and the severance benefits to retrenched employees would be capped across the board, regardless of years of service.
Should SAA be liquidated, every employee, no matter the numbers of years spent at the airline, will receive only a capped severance settlement of R32 000 and lose all other benefits.