Solidarity goes to court to have SAA placed under business rescue

Solidarity wants SAA to be placed under business rescue.

The trade union on Thursday said it had filed an application to the court and served the papers on SAA and the ministers of finance and public enterprises, Tito Mboweni and Pravin Gordhan respectively.

“If Solidarity’s application is successful, it would be the first time that a state enterprise is placed in business rescue. This will mean that the court can appoint a business rescue practitioner with comprehensive powers to rescue the airline,” the union said.

Solidarity said it was acting on behalf of some of the members affiliated to it at SAA, its members in public enterprises, and every taxpaying South African.

The union stressed that business rescue was the only way to keep the jobs of the hundreds of people who stood to suffer should SAA crash.

This comes after the national carrier announced last week its plans to retrench almost 1,000 workers.

“We are profoundly aware of the crisis SAA finds itself in. SAA is heading for liquidation which will have huge consequences for employees, the SA economy and for taxpayers. In all, 11,000 workers will lose their jobs and a debt burden of billions of rands will have to be absorbed by the Treasury if there is no radical intervention,” said Solidarity COO Dirk Hermann.

“A business rescue application is the only remaining option to limit the damage. Recent events at SAA accelerated the crisis. SAA’s Day Zero is imminent. The current shareholder has lost control over finding a solution for SAA,” he added.

The group said it already had a solid plan to turn things around at the airline.

“Solidarity has included a comprehensive turnaround plan which was compiled by a team of leading aviation experts in SA and internationally, in its court documents. The experts who helped with the development of the plan include the international aviation expert Guy Leitch, who made a huge contribution, as well as former CEOs of SAA. Interviews were conducted with CEOs of other airlines and case studies from a PhD thesis were used,” it said.

The group said it had planned to bring a business rescue application last year but its plans were halted.

“Following negotiations and an agreement reached with former SAA CEO Vuyani Jarana, a decision was taken not to proceed with the application. Solidarity had great confidence in Jarana, and still has. However, he has left and in Solidarity's view, the agreement reached could not be implemented,” Solidarity said.

On this latest bid, Solidarity said it had been in talks with the SAA board, Gordhan and other stakeholders.

It acknowledged, however, that the business rescue plan would be no quick-fix solution.

“Business rescue is no magic wand for SAA. In fact, it drives the crisis to a head with no guarantee of a solution. However, we know that the current path is past the point of finding solutions. The current trajectory would mean an overall collapse of all operations within SAA. Business rescue gives us the chance to save those parts of the SAA that are still functional and efficient,” said Hermann.

SAA has this week been operating on skeleton staff with employees affiliated to the National Union of Metaworkers of SA and the SA Cabin Crew Association downing tools.

Besides the looming retrenchments, the workers are fighting for a wage increase. The company offered a 5.9% increase for employees for 2020 but they are demanding 8%.

Numsa spokesperson Phakamile Hlubi-Majola on Thursday said the unions and SAA were participating in mediation under the auspices of the Commission for Conciliation, Mediation and Arbitration (CCMA).

Solidarity, however, said that with each passing day of the strike, the state-owned entity continued to lose millions. It said it was time for “a radical intervention by a third party”.

“We also believe that a business rescue application will be in the interest of the current shareholder, the state. The right decision would be if the current shareholder would bring such an application itself. We want to appeal to the current shareholder not to oppose the business rescue application, but rather to work closely with the business rescue practitioner to find a solution,” said Hermann.

He said agreeing to the business rescue would stop all possible legal processes by creditors to liquidate SAA.

Solidarity said SAA was “hopelessly insolvent”.

“The liabilities of the company exceed the assets by far and the situation deteriorates year after year.

“We are realistic about the possibilities that accompany business rescue. It is not the perfect solution, but SAA’s circumstances are also not perfect. To wait until SAA turns around perfectly by itself, given the history, is irresponsible and is not grounded in the reality that this enterprise is on its way to total collapse. Business rescue offers an opportunity to make an emergency landing instead of aiming for disaster.

“SAA will not be able to continue in this current format. It has never been sustainable. Business rescue means that we can limit the damage to all relevant interest groups, we can create security and we can save billions of taxpayers' money. The longer we take, the worse the consequences will be,” Hermann added.