Is SAA set to fly higher once again?

It remains to be seen whether SAA interim CEO Phillip Saunders, despite his experience, can realistically implement meaningful interventions in his acting capacity, the writer says.
It remains to be seen whether SAA interim CEO Phillip Saunders, despite his experience, can realistically implement meaningful interventions in his acting capacity, the writer says.
Image: BUSINESS DAY

After six months of turbulent negotiations, the business rescue plan of the South African Airways was given the nod by 86% of its creditors yesterday.

As per its amendments, it will see an additional 1,000 employees retained on a year-old training scheme.

Welcoming the move, the department of public enterprises also announced airline executive Phillip Saunders as the SAA's interim CEO, who it said would work closely with the board to appoint an interim management team and begin the restructuring of the airline.

It remains to be seen whether Saunders, despite his experience, can realistically implement meaningful interventions in his acting capacity and in the interim period for which it is envisaged.

Nonetheless, for minister of public enterprises Pravin Gordhan's department, the vote is a favourable one and a much better result outcome for creditors and SAA employees than liquidation of the airline.

"The government remains confident that the implementation of the business rescue plan will balance the rights and interests of all parties," the department said.

The opposition disagreed.

The DA called the vote "a self-interested grand financial heist to reap millions of rands in taxpayers' money while saddling the fiscus with an expensive dud disguised as a new airline".

Other critics further painted it the weakest business plan possible, as it did not give significant picture of how the airline would be turned around, especially in light of the impact of Covid-19 which has seen the aviation industry grounded for months.

The big question is where the airline's funding will come from?

Yesterday, the department said its priority would now be how to "give effect" to funding commitments by government for the business rescue plan.

The airline's structure is estimated to cost about R10.4bn. This would be over the R16.4bn which government plans to pay its guaranteed debt over three years.

Beyond debt guarantees, Treasury has so far been non-committal.

For this plan to land public credibility, this financial elephant in the room needs to be addressed.

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