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Govt to restructure ailing SAA

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‘New’ airline will be funded through a variety of options

THE DEPARTMENT of Public Enterprises has announced a new strategy to save South Africa’s collapsing national carrier South African Airways (SAA), which has been in business rescue since December.

Declaring a new leadership compact agreed upon by all stakeholders, the department said the airline would be embarking on a restructuring drive from which will emerge a “new SAA” that will be internationally competitive for safety, quality and cost in a post-Covid-19 world.

“A new and bold approach is required if there is to be any chance that South Africa can retain vital airlift capacity and trade connections, through a strategic national asset, with both public and private sector participation, which is internationally competitive, viable, sustainable and profitable,” the department said in a statement on Friday.

The new airline will be funded through a variety of options, such as strategic equity partners, funders and the sale of non-core assets.

The department warned that jobs would be lost as the airline moves towards a “performance-based culture” but that it would look to mitigate these losses through measures such as preferential re-employment, re-skilling and enterprise development opportunities.

The department’s announcement comes after the business rescue practitioners tasked with salvaging SAA cautioned on April 23 that without further funding from the government, the airline would not be able to continue trading or pay salaries beyond April.

Unions and non-unionised employees had until April 24 to either agree to a soft wind-down of the airline, with severance packages, or face the liquidation of the national carrier.

On April 25, Public Enterprises Minister Pravin Gordhan convened a high-level meeting between senior government leadership and representatives of the SAA unions to formulate the leadership compact.

It was agreed with the business rescue practitioners that they would not consider an application for liquidation. In addition, they would suspend the section 189 notice until Friday, May 1. The section 189 notice, presented on March 9, had advised all unions and employees of SAA’s intention to start retrenchment.

In Friday’s statement, the department said that Gordhan had established “very demanding timelines for the development of the business rescue plan and parameters in order to determine what path the old SAA could follow”.

It stated that the government and unions were working together to develop a business model “to produce an airline which is a catalyst for investment, job creation in key sectors, economic growth throughout all regions of the country and is a mirror to the world reflecting the splendour and beauty of our great nation”.

The ministry said the new airline would be staffed at competitive and benchmarked rates and be led by skilled, competent and experienced management, enabling SAA to compete in the post-Covid-19 world.

– African News Agency (ANA)