Who will finance SAA’s latest flight of fancy?

There is an air of incredulity surrounding South African Airways’ (SAA) business rescue plan. Rightly so, because it has a whiff of desperation mixed with despair about it.

It does not represent the grand denouement that many watchers had anticipated in this long-running corporate soap opera. Indeed, it has thrown up more confusion and left many questions unanswered.  

Even the statement from the Department of Public Enterprises released upon the publication of the plan late on 16 June 2020 had an undercurrent of uncertainty. The department itself does not appear to be entirely convinced about what the business rescue practitioners (BRPs) have pieced together. 

“We will assess the plan which, we are concerned, might have not been adequately accomplished,” reads part of the statement the department sent out just before the clock struck midnight on 16 June.

In short, the department, whose minister is the government’s shareholder representative at SAA, does not seem to have much confidence in what it has gleaned from the BRPs’ plan. Don’t be surprised if the department comes up with an alternative plan, with help from unions and its own advisers, Seabury Aviation Consulting.

There is, after all, the Leadership Compact Forum – also known as the Labour Consultative Forum – comprising two SAA unions and the department. It is here, on this forum, where difficult and detailed conversations have taken place in the absence of the BRPs.    

The forum was constituted after two of the major unions at the airline felt the BRP-led process was an affront to transparency and offended the principles of robust engagement. In simple terms, the unions did not trust that their inputs would be taken into account substantively.

In its statement, the department alludes to this: “… Government has enabled consultations with employee representatives in the Labour Consultative Forum. This process must be embraced by the BRPs and taken to a state of completion.” 

That last line effectively opens the door for further tweaks to what has already been published. Crucially, meaningful consultation with labour is a precondition for the plan’s legitimacy.

This is a strange turn of events, considering that the department gave its backing to the business rescue process when it commenced in December 2019. In contrast, unions resisted the business rescue of SAA from its onset.  

But six months is the equivalent of a lifetime in South African politics.

And so, here we are, at this juncture, where the department and the two unions have thrown their lot together in the expectation of an equitable outcome for one of the flagship carrier’s most crucial stakeholders: its employees.

In the same vein, Public Enterprises Minister Pravin Gordhan’s reputation is also on the line. It is in Gordhan’s interests, as a member of the executive responsible for overseeing state-owned entities, to demonstrate efficacy.

As such, Gordhan will be assessed on the outcome of the business rescue process – no matter which way it goes.    

The road leading up to the plan has been paved with chaos, confusion and turmoil. There have been high-intensity skirmishes between the BRPs and the two unions through the courts, and elsewhere.

The events leading up to SAA crash-landing into business rescue are well documented and the company is a textbook case of the perils of State Capture – otherwise known as white-collar crime.

Could it be, then, that another bailout or government guarantee is in the offing for SAA? Or will the government be brave, as Finance Minister Tito Mboweni implored his colleagues in Parliament last week, and institute the urgent reforms required to get the fiscus back in shape?