Plans to save SAA are going nowhere

The government seems to think it can pull a rabbit out of the hat to save ailing state-owned airline SAA, but all it is actually doing is kicking the can down the road and delaying the inevitable.

There has been a back-andforth between the government, the SAA business rescue practitioners and the unions over the past four months, but all this activity has come to nothing.

There is still no restructured airline, and the government is refusing to give the practitioners additional funds for the process. The livelihoods of about 5,000 employees hang in the balance.

It has been clear for some time that the business rescue practitioners have lost the support of the government, making the success of the process even more unlikely.

Then, in a bizarre turn of events earlier this week, the department of public enterprises boldly announced that it was looking to establish “a new financially viable airline”. How, you ask? Well, nobody knows. You would think one commercially failed national airline would be enough.

What makes the situation even more inexplicable is that providing the finance needed for restructuring of the business might ensure at least some jobs are saved, but the government rather wants to bet the farm on something new.

Even more ludicrous is that it comes as airlines around the world plead for government bailouts due to the global spread of the novel coronavirus, which has led to the suspension of air travel and projections that the dynamics of the industry will change. Aviation is not the most sound investment to be making in April 2020.

The government knows this, as it refused to provide the R10bn needed to ensure the business rescue process for

SAA can continue, in a bid to salvage something from the wreckage of a state-owned enterprise that has been called a vanity project but has turned into a tragedy.

The government also refused the practitioners’ request to raise funding in foreign capital markets, and SAA itself is unable to raise further funding in domestic markets and owes huge debt to a consortium of local banks.

This left the business rescue practitioners with no other option than to look at a structured winding down of the company, with the retrenchment of all staff.

A draft agreement, sent to unions last week, set out the process for the termination of employee contracts at the end of April, with severance packages only to be provided if funds existed at the end of the winding-down process and sale of assets.

After reports of this, the government released a statement contradicting the business rescue practitioners, insisting that SAA will not be embarking on wholesale retrenchments.

The unions have in turn rejected the practitioners’ proposal, and on Tuesday met public enterprises minister Pravin Gordhan without the business rescue practitioners. And so followed the statement revealing that a new airline is on the cards.

The statement talked about coming up with a “creative solution” for SAA, which one can only assume means trying to find yet another form of lifesupport for a patient whose body has long given up.

There is something admirable about the determination to give hope to the thousands of people who work for SAA, but the reality is that there is no way this can be done without pumping taxpayer money into the airline, and that well is dry.

Surely, to create anything new, money is needed, and those taps have already been closed. If the government does somehow decide to provide this funding, how will it justify it?

Even more bizarre than all of this is that we are having debates and conversations about whether the airline should be saved at a time when flights are grounded worldwide, and there is no indication when people will be able to travel again. As a country, we have bigger issues to worry about than an airline that was already too expensive for most South Africans to fly with.

To mitigate the dire economic effect of the Covid-19 pandemic on SA, earlier this week President Cyril Ramaphosa announced a R500bn social and economic support package, which will hopefully breathe some life into the economy and ensure millions of South Africans can eat while this all plays out.

That is where the focus, and the money, should be going right now. The government should make peace with the fact that the demise of SAA rests squarely on its shoulders, as its inevitable end was in sight long before the global aviation industry crashed due to the spread of the coronavirus.

A few months ago the business rescue practitioners would probably still have been able to salvage something from the wreckage of the airline, but as a result of the government’s paralysis I fear it is now too late. The only thing left to be done is to ensure SAA employees are not left completely in the lurch, and then let it go.

A lesson for the government to take from the SAA debacle is not to fiddle while Rome burns.

IT HAS BEEN CLEAR FOR SOME TIME THAT THE BUSINESS RESCUE PRACTITIONERS HAVE LOST THE SUPPORT OF THE GOVERNMENT

THE GOVERNMENT SHOULD MAKE PEACE WITH THE FACT THAT THE DEMISE OF SAA RESTS SQUARELY ON ITS SHOULDERS