Government may be using divided trade union support for SAA’s business rescue plan as a convenient ‘Get out of Jail’ card after the new national budget spelled out that there is no money to rescue the airline, says aviation commentator, Linden Birns.

Economists believe the plan will cost up to R35,5bn (€1.82bn) to implement. However, there has been no mention of further SAA funding in the latest budget, nor confirmation of Government claims of interested investors.

Stung by lack of support from three trade unions for the proposed plan, Government has withdrawn from a joint labour forum and accused them of putting the airline and jobs at risk, and creating uncertainty for creditors and potential investors.

Despite Government pressure to push through the plan, the National Union of Metalworkers of South Africa, the South African Cabin Crew Association and the SAA Pilots Association were amongst 69% of creditors who Thursday (June 25) voted to adjourn a creditors meeting.

Others included Airlink, SITA, Sasol, Tourvest tourism group, International Aero Engines and DXC Technology.  Amendments are to be published by July 7 and creditors will reconvene on July 14.

In a statement, the Department of Public Enterprises (DPE) accuses the unions of “contradicting the letter and spirit” of the Leadership Consultative Forum (LCF); taking an “anti-worker stance” by “aligning themselves with a competitor” by supporting Airlink’s motion to adjourn the vote; and putting “SAA on a path towards possible liquidation”.

It further complains that forum participants leaked confidential information and publicly attacked the DPE.  The department urges employees to accept a generous voluntary severance package – reportedly totalling R580 000 (€28 990) per employee – which is supported by a social plan and a skills development programme.

“The LCF always looked like a political ploy to placate the unions, especially Numsa and SACCA, as they are more likely to represent ANC voters,” comments Birns. “It was never clear just how the LCF would work as a parallel process and not one that was integral to the BRPs' method. The DPE possibly thought it could foist it on to the BRPs, but all they've done is make politically expedient promises that, thanks to the budget, cannot be kept,” he says.

Airlink CEO and MD, Rodger Foster, says the DPE’s move amounts to bullying, saying all creditors have raised equally valid, unanswered questions. “They all speak to the fairness, viability, plausibility, funding and legality of the rescue plan, the business rescue process and its compliance with the Companies Act, as well as the BRPs’ independence.  The outcome was a 69% vote to adjourn the meeting in order for the BRPs to openly and honestly address these concerns and to put forward the necessary amendments to the plan.”

He adds: “Nobody denies the bigger economic benefit of having an airline capable of connecting South Africa with key African and long-haul markets.  What is needed is a credible plan to resuscitate SAA, with a reasonable settlement arrangement that does not unfairly prejudice some stakeholders in favour of others in eliminating SAA’s debt and liability at the expense of certain creditors.”