Citizen Reporter
Reporter
3 minute read
14 Jul 2020
4:43 pm

Restructured SAA no vanity project, but a better business – DPE

Citizen Reporter

An additional 1 000 employees will be retained, while 'productivity and efficiency will guide the performance system' from now on.

SAA planes at OR Tambo International Airport, 14 November 2019. Picture: Neil McCartney

The restructuring of SAA is a project on behalf of the democratically elected government and not a “vanity project” of the department of public enterprises (DPE) or that of National Treasury.

“This is far from the truth. The re-emergence of SAA is good for the country, as we will explain,” DPE acting director general Kgathatso Tlhakudi told a creditors meeting on Tuesday, where the vote went in favour of a business rescue plan, and not liquidation of the airline.

The process has been undertaken in a responsible manner to ensure a balance in attaining a financially and commercially sustainable and viable airline, and minimising the negative social impact of a restructuring process, Tlhakudi said.

ALSO READ: ‘New’ SAA on its way as creditors OK business rescue plan

“We believe that an example for a responsible business transformation process has been set for the South African public and private sector. The parties entered the process understanding everyone will have to give in a little to attain the bigger picture.

“SAA taking to the skies is important for the country and the region to achieve the following:

  • Provision of essential air services for the repatriation of South Africans stranded in other parts of the world, and flying of critical medical supplies was made possible because we had SAA.
  • We could not rely on other countries’ carriers as they were grappling with the emergency brought on by Covid-19.
  • The integration of the region is dependent on an effective air route network due to the large distances between our economic centers. Anyone that does business in the subcontinent can attest to this.
  • The national economy is dependent on international investment and trade, and air connections are critical in ensuring that South Africa remains on the sights of foreign investors.
  • We have a beautiful country that is dependent on international tourists for its viability. Further, there are many people in this sector that derive their livelihoods from people taking their time to visit our country.”

He added that the restructuring that is being proposed for SAA “is fundamental and will create a solid base for the emergence of a competitive, viable and sustainable national airline for the Republic of South Africa”.

“The restructuring is different from previous attempts at turning around the business. The old way of contracting for labour and services is being departed from. Productivity and efficiency will guide the performance system going forward.

ALSO READ: Senior pilots earn at least R3.6m a year, but trying to squeeze SAA dry – govt

“We need an SAA which will emerge from this restructuring and its subsidiaries to be attractive assets that will attract strategic equity partnerships and other business partners. This has been reflected in the approaches that government has received from local and international investors and players.

“I wish to point that the process of appointing a transaction advisor to tie up the initial engagements that government has had with prospective strategic equity partners is being concluded, and in not too long a time we should announce the preferred SEPs for SAA group, and its various business units.”

Tlhakudi added that the new SAA “will be a worthy partner to those that choose to support the process that is represented by the business rescue plan” and will be “a better business going forward”.

“The Government in ensuring viable restructuring process has been responsible in developing a social plan, which is a unique feature of this undertaking. An important feature is the temporary layoff scheme that will ensure that an additional 1 000 employees can be retained.

“The business model has catered for a responsible ramp-up of operations in response to the pandemic trajectory, which is due to peak in South Africa between August and September 2020. The base established will ensure a firm foundation for growth going forward,” he said.

Cabinet has also expressed its support for the concerted effort to mobilise funding from various sources to finance the business rescue plan, he added, including from potential equity partners for the uptake of the new airline.

Tlhakudi added that they were humbled by the support of organised labour.

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