Restructuring of SAA under the spotlight

Restructuring of SAA under the spotlight
06 Jul 2020

The transformation of South African Airways (SAA) into a competitive airline will require sacrifices and a major restructuring.

The public enterprises department confirmed this in a statement cautioning against the liquidation of the airline.

The department added that the restructuring will commence on a conservative basis and gradually and systematically increase over three years to “re-employ as many of the displaced employees who have necessary skills and competence”.

The department supports a restructuring process that will result in an internationally competitive performance; a demographic profile of skilled, competent and committed employees and the growth of the airline to provide opportunities for former employees to be re-employed.

The department cautioned SAA employees, labour unions and creditors that “liquidation – the process of winding down the airline and disposing of its assets, will lead to financial hardship for employees and substantial undervaluation of assets”.

“All SAA stakeholders who are in a position to either support or reject a business rescue plan for SAA should realise that business rescue provides a better outcome than liquidation and should be supported for their collective interests.”

The SAA Business Rescue Practitioners have scheduled a creditors’ meeting for Tuesday July 14th to vote on the business rescue plan.

75% of the voting interests will need to support the plan in order for it to be adopted.

The department emphasized that a vote against the plan would result in the “protracted and costly liquidation of the airline”.

R2.2 billion has been budgeted for Voluntary Severance Packages for SAA employees should the plan get the thumbs up.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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