Financial specialists appointed to turn around cash-strapped SAA defended their decision to substantially cut the airline’s domestic routes at the end of the month, saying they intended to wean the flag carrier off government bailouts.  

State-owned SAA entered business rescue, a form of bankcruptcy protection aimed at rehabilitating a financially distressed company, after several years of operational losses and government bailouts that have exposed SA fiscal constraints. 

“The decisions we took and informed the public of this week were taken in the best interests of SAA," said Les Matuson and Siviwe Dongwana, joint Business Rescue Practitioners in a statement.

"They are intended to make the airline commercially and operationally sustainable, free from the requirement of future funding from the government post the implementation of the restructure.” 

Their comments come days after government objected to their plans to stop flights to Durban, East London and Port Elizabeth as part of  sweeping changes aimed at saving money for the airline and dressing it up for potential strategic partners.  SAA flights to Cape Town will continue on a reduced basis.

The public enterprises department signaled on Friday it may attempt to force to the business rescue practitioners to reverse their decision as the move would cause market and customer uncertainty which may jeopardise the long term future of the airline.

 “We recognise the concerns raised, especially around the domestic routes. We will continue to engage with stakeholders, with a commitment to include inputs into the final business rescue plan,” Mutuson and Dongwana said.

Under SA corporate laws, business rescue practitioners can theoretically ignore objections to their reorganization and restructuring plans, but since the government is the sole shareholder and creditor they may be forced to include its input into the final rescue plan, which would have to approved by creditors.   

The plan is due to be published by the end of this month.