Sham SAA rescue is too late, Eskom needs a real one

Columns by candlelight. How romantic. Still, it’s important to remember that it took the ANC almost 50 years of struggle to fight for Eskom and another whole 20 to destroy it. That’s about 70 years of electricity we may not have had and surely something to be grateful for, even now. It is important not to be angry when you write. I’ve done it a few times and the results have never been good. But here’s the thing: the socalled “voluntary” business rescue of South African Airways and its subsidiaries, including Mango and SAA Technical, is anything but voluntary. It was a decision made in a panic when it became clear the trade union Solidarity was going to court to apply for SAA to be put into rescue, and if that happened the government would not have been able to influence the process.

What we have at SAA now is a sham business rescue, with the state still pouring in money and the banks doing their duty by lending to the shattered airline as well. This way, at least SA doesn’t suffer the embarrassment of hundreds of angry passengers stranded around the world.

But what the state, or at least the department of public enterprises (DPE), hopes is that the R4bn in new money SAA gets after rescue buys it the clout to influence the business rescue practitioner, Les Matuson, in the way he goes about managing the airline.

They have lots of ideas. They’ll move SAA Technical over to weapons group Denel, where it’s a better fit and will somehow grow Denel into a powerhouse. They’ll close unprofitable routes, they’ll look at international, continental and domestic routes as different problems with different solutions. They’ll “spin off” Air Chefs. Sell Mango.

Whatever. They may have lots of ideas but they have no more time. They want the business rescue done in three months. One of those is December, for crying out loud.

It. Is. Too. Late. Already. In three months the R4bn will have been eaten and SAA will still not survive. This is a market-sensitive business we’re talking about here. Confidence is everything. SAA Technical may be an asset but it is also a stinking heap of corruption and inefficiency and no-one in their right mind would want to attach it to something of real value like Denel.

Against my instincts and probably my better judgment, I found myself quietly cheering Solidarity for forcing the issue. The DPE would have gone on thinking about the wonderful mix SAA Technical and Denel would make for years, bailing out SAA until it was perfect. That’s central planning for you. But everyone has a plan until they get hit in the face, which is what Solidarity did to the DPE.

And as I write this and Eskom is at stage 4 load-shedding, I wonder why Solidarity should not do us all a favour and go to court to put Eskom into business rescue as well? It’s potentially a way out for the government not to have to make tough decisions.

There’s a state plan for Eskom — split it into three, make power stations compete to supply into a separated transmissions company, remove half the debt and all that. It’ll take, they say, three to six years to complete while, you know, every possible political contingency is catered for.

But a business rescue practitioner could do all that in a month. Under pressure, humans can do almost anything. George Patton built a bridge across the Rhine in a day in 1945 and moved an army over it. Our government still thinks it has time. It is deluded. Durban port is close to failure; it’s not even on the radar. Eskom clearly no longer has anyone with the nous or clout to order diesel in time for when its many coal-fired units go down. It is an absolute circus.

A business rescue practitioner could sort Eskom out in no time. It isn’t a big problem. It supplies a product and doesn’t get paid for it.

So? Stop supplying people who don’t pay. Simple as that and it’s what any respectable business rescue practitioner would do. In fact, why does load-shedding not automatically start with people who don’t pay? Eskom says one of its biggest debtors is none other than the department of public enterprises itself. Shutting it down might save the country a fortune (the DPE strongly denies it owes Eskom money).

But let’s stop the agony and lance the boil. If Solidarity won’t take Eskom out of the state’s clammy hands maybe someone else with access to a smart legal team can. Let’s test this new SOE business model. If it works at SAA, why not at Eskom? The electricity monopoly may be too big to fail, but it isn’t too big to rescue.