Government opposes an application by Airlink to have SAA placed under provisional liquidation, terminate the business rescue process, sack the business rescue practitioners (BRPs) and stop a creditors’ meeting from voting on the plan, the Department of Public Enterprises (DPE) confirms.

According to Airlink, the matter will be heard in the South Gauteng High Court on Wednesday, June 24, ahead of the creditors meeting scheduled for June 25.

In a statement, DPE also notes plans by the National Union of Metalworkers of South Africa (Numsa) and the South African Airways Cabin Crew Association (SACCA) to interdict the creditors’ meeting, saying it will similarly oppose such application.

“As we approach the final week to either endorse or reject the business rescue plan by the BRPs, it is disturbing that a competitor of SAA, which is 100% privately owned, as well as two labour unions, who should be acting in the best interest of their members, are seeking to destroy SAA by forcing a liquidation through the courts. The question is why? Is this really in the interest of SAA workers or the fiscus?” DPE says.

Airlink CEO Rodger Foster responds that Airlink and SAA are not competitors, as alleged by DPE. He points out that Airlink terminated its long-standing franchise agreement with SAA after the airline went into business rescue and failed to pay over more than R700m of revenue for tickets issued on flights flown by Airlink. 

He explains the reasons for Airlink’s court application as follows: “The proposed SAA business rescue plan prejudices concurrent creditors, including Airlink, to the benefit of SAA’s shareholder DPE, which will then own an unencumbered business, funded by concurrent creditors, but still commercially insolvent.”  Foster says all creditors – including Airlink - deserve a fair deal based upon a reasonable settlement. 

He adds: “The plan is commercially implausible, especially given the uncertain outlook for the industry after the COVID-19 crisis.  It also fails to meet Government’s stated objective of establishing an airline that would be sustainably viable and independent of the fiscus.  The plan requires taxpayers to prop up the company for several years post rescue. The plan is still conditional, SAA remains commercially insolvent on the business rescue practitioners’ own version, and there is no indication as to how the plan and the expected losses will be funded.”

He alleges the BRPs are not adequately independent as contemplated in the Companies Act.