SA aiming for viable airline from SAA business rescue

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The South African government will work with unions to ensure a new financially viable and competitive airline emerges from South African Airways (SAA) business rescue process, the Public Enterprises Ministry said.

The airline entered a form of bankruptcy protection in December, since then it suspended all commercial passenger flights due to the global coronavirus pandemic.

In a virtual meeting with labour unions, the Inter-ministerial Committee on SAA reiterated government was not in a position to provide more capital to the state-owned airline, the ministry said in a statement.

Last week, government told the airline administrators it would not provide more funds, lending guarantees or allow foreign financing of a business rescue plan.

“The Unions agreed in arriving at a solution for SAA, some jobs will be lost and remaining employees will need to sacrifice some unaffordable arrangements that worsened the airline’s financial position,” the ministry said.

“It was agreed social plans will be developed to cushion the effect of losing jobs on affected employees.”

A proposal by the airline’s administrators, seen by Reuters last week, said SAA’s entire workforce of around 5 000 would have employment terminated by mutual agreement on 30 April.

They would be entitled to a week’s pay for every year of service, a month’s pay in lieu of notice pay and pay for outstanding annual leave. The proposal said it seemed “unlikely the company will be successfully rescued as a result of the business rescue process.”

SAA has not been profitable since 2011 and received more than R20 billion in bailouts in the past three years, becoming a drain on public resources at a time of weak economic growth.