ANA 07 May 2020

Parliament – Public Enterprises Minister Pravin Gordhan on Wednesday has told MPs every effort is being made to resolve the desperate situation surrounding South African Airways (SAA) and has suggested the carrier’s business rescue practitioners have fallen short of government’s expectations.

Gordhan, in a virtual briefing to Parliament’s public enterprises committee, also voiced sympathy for concerns voiced by trade unions as they face pressure to sign off on retrenchment agreements for the airline’s roughly 5 000 staff.

He said the business rescue team’s proposed wind down of SAA was not in line with the “original purpose” in their brief, and that they had not been sufficiently prudent with funding made available to them and had failed to consult enough with both trade unions and the government, as the shareholder.

Gordhan acknowledged objections from trade unions that they were asked to agree to retrenchments without having been shown a proper business rescue plan and had not been adequately consulted.

The minister accepted that not all jobs could be saved, but said it was hard to understand how many precisely needed to be sacrificed when there was no clarity on details such as a proposed new route structure and aircraft fleet.

The National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association have gone to the Labour Court to have retrenchment notices sent out to employees under section 189 of the Labour Relations Act, declared unlawful because the two unions have yet to see a business rescue plan.

Gordhan said the government too was pressing the business rescue practitioners for details of a plan, saying the department had been shown something, that was more a historical summary than a blueprint for the future.

“An outline has been given to us [but] much of it is about history, not too much of it is about solutions,” he said.

He said this was a point of contention, as was their stance that all flight operations, including Covid-19 related repatriations, would cease on Friday.

“In the next 48 hours we will be meeting with them to discuss finances, to see how much money can be found beyond 8 May,” he said, adding that the government wanted clearer accounting of the R5.5 billion it made available to the business rescue process.

“R5.5 billion have been spent in the past five months, something we have been questioning … these are matters of accountability we have been getting into,” Gordhan said, adding that “more savings could have been made”.


The minister said the department would ask for some flexibility to be shown on plans to ground the airline completely come Friday “if we can find savings from within the R5.5 billion”.

He also called on the business rescue team to agree to reduced fees in a spirit of magnanimity and to account fully for work commissioned from consultants, adding that one consulting firm charged R35 million “but we have not seen the product of what they have actually done”.

Gordhan said “every effort” would be made to find a way to reposition it as a viable carrier with private partners and minimal funding from the state.

He added that he would not go as far as saying he was hopeful for success in this regard, and acknowledged that airlines around the world were grappling towards a post Covid-19 future.

The department knew that SAA in its current form was not viable and wanted a “constructive resolution from the old to the new”  for the airline, in the full knowledge that a new venture was unlikely to hit the ground running. 

“Even the new is not something that starts at an optimal level. All airlines are going to start at a small scale and depending on the market situation grow to whatever they have to offer,” Gordhan said.

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