A decision on the South African Airways (SAA) strategic equity partner can be expected by March this year, according to the Department of Public Enterprises (DPE).
DPE director general Kgathatso Tlhakudi has steered clear of mentioning the names of the equity partners that are being considered by the department. Tlhakudi however told Parliament’s portfolio committee on public enterprises on Wednesday that the airline has received 30 expressions of interest from various stakeholders.
The SAA interim board, which was appointed by DPE minister Pravin Gordhan in December, has been presented with the shortlist of equity partners and is expected to finalise the candidate by the end of the financial year.
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Ethiopia’s flag carrier Ethiopian Airlines Group has however previously been mooted as the government’s preferred equity partner.
Gordhan said the government cannot reveal the shortlist of the candidates for the equity partners because it may lose its “competitive advantage” during the negotiation processes.
Tlhakudi says the further funding for the airline is expected to be provided by the strategic equity partner following the conclusion of the airline’s business rescue process.
SAA was placed under business rescue after failing to be profitable for over a decade and relying on government bailouts. In October, National Treasury allocated SAA R10.5 billion for its restructuring and in November R3.5 billion was made available to the airline’s rescue practitioners, Les Matuson and Siviwe Dongwana.
DPE spokesperson Richard Mantu has previously told Moneyweb that the remaining R7 billion allocated to the airline’s rescue practitioners will be transferred this month.
Tlakudi clarified that the payments of the voluntary severance packages which was signed by workers in August last year will be paid out to workers in two tranches. The first tranche will be paid out to the airline’s non-management staff on February 12 and the second tranche to the airline’s management on February 19. Out of 3 250 applications received for the severance packages, 3 163 have been processed.
Workers at the airline have been without salaries since April last year, barring UIF Covid-19 Temporary Employer-Employee Relief Scheme (Ters) payments. In December, the airline signed a settlement agreement with four unions, allowing workers to be paid three months deferred salaries, 5.9% increase backdated to April 2020, as well as an equivalent pro-rata contribution towards a 13th cheque.
Read: Court reserves judgment in SAA unions’ appeal for backpay salaries
Labour unions, National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca), have approached the labour court to declare these payments unlawful or unfair. The unions initially declined the offer in December but now want the court to compel the airline’s rescue practitioners to pay their members the same amount which was paid to other union members.
During a presentation to the portfolio committee on an update of the airline’s rescue plan, Tlakudi defended the DPE’s opposition to the union’s application, saying that the airline cannot afford it since it has limited funding due to the airline being inoperative for nearly a year, adding that the application puts the business rescue process at risk.
The payment of workers is one of three outstanding issues that is required to be finalised before the airline’s rescue process is concluded.
Tlakudi says Matuson and Dongwana are expected to exit the airline by the end of February.
The department has noted its concern over the long-drawn out rescue process which entered its thirteenth month in January. According to media reports the rescue practitioners have been paid R200 million for their services. Gordhan however did not confirm or deny this.
The rescue practitioners will then hand over the reins to the interim board which is expected to be in place “for the next few months,” according to Gordhan.
He said, “The BRPs are their own bosses [and] they have nobody to report to the court when they conclude their work.”
Gordhan suggested that the Companies Act should be amended in this regard, to ensure that BRPs have some accountability to shareholders for fees paid to them, how the funds are spent and how they account for the funds, “they can’t be free agents that have total autonomy.”
“For as long as SAA is in business rescue neither the board nor the shareholder has any control over what happens at the airline,” he said.