SAA’s future remains in limbo as unions secure delay to rescue vote

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Decisions on the future of South African Airways have been pushed back by nearly three weeks, after three unions secured an adjournment of a crucial creditor meeting, in order to buy time to adjust the business rescue plan.

The SAAPA, SACCA and NUMSA unions – representing pilots, cabin crew, and other SAA workers – secured support for an adjournment to 14 July, with 69% of the vote in favour of the postponement.

These unions have asked for the business plan to be revised, to address “deficiencies”, and republished by 7 July – some seven months after the initiation of business rescue – according to minutes disclosed by SAA’s rescue practitioners.

These revisions would aim to include fewer conditions while providing “greater certainty for affected persons”.

SAA A330

Source: South African Airways

South African Airways has been in business rescue since December 2019

The unions also reasoned that an adjournment would provide creditors with additional time to review the amended plan, potentially offering “many positive effects” while not affecting the position of the airline, given that the original business plan would not have come into effect until 15 July.

Postponement of the vote prolongs the uncertainty over SAA’s future, following multiple disruptions to the long-running business rescue scheme, including union objections, parliamentary intervention, and the impact of the coronavirus crisis.

On the eve of the 25 June creditor meeting, South African regional carrier Airlink made a bid to have SAA liquidated.

In an answering affidavit to the Gauteng high court in Johannesburg, the government’s department of public enterprises – the owner of SAA – criticised the “last-minute” intervention by Airlink.

Airlink’s urgent request for SAA’s liquidation, it added, needed to be seen in the context of Airlink’s being a competitor to SAA.

“Its incentive is not simply to get payment of a creditor’s claim,” it said, pointing out that Airlink’s position would be “substantially improved” without SAA and, potentially, its subsidiary Mango.

The court agreed with SAA’s representatives and chose to “strike off the roll” the Airlink application, states the department of public enterprises, with the judge ruling that it was “not urgent”.

But while the department had hoped, after the ruling, that there would be “no further delay” to the creditor vote, the passing of the union motion during the 25 June meeting keeps SAA in limbo until mid-July at least.

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