Minister, how dare you propose starting a new state airline from the soon-to-be ashes of South African Airways (SAA)!
You put SAA into business rescue ‘voluntarily’ to avoid losing control when the union Solidarity was about to apply to court for business rescue.
Although the control of the business rescue process is, by law, entirely in the hands of the business rescue practitioners (BRPs), you have contrived to meddle by ensuring our taxes go to keep SAA alive while you tried to figure out how to continue to have a state-owned airline.
In Phoenix to arise from old SAA – DPE SAA Leadership Compact, a ground breaking initiative on Politicsweb on 1 May, your spokesman Richard Mantu perpetuated the lie that the existence of a state-owned airline was necessary for tourism, the aviation industry and as a catalyst for development and job creation.
We don’t need state involvement; the private sector or foreign airlines will fill the gap – if we have an economy that can support a tourism industry at all.
In the past 10 years, the African National Congress (ANC) has misgoverned our economy into the ground. Even considering a state airline anytime, in the face of our being bankrupt, will be a slap in the face for tens of millions of poor people. You and your colleagues are increasingly impoverishing people just to boost your collectivist egos by embarking on a vanity project.
The BRPs were to submit their report at the end of February. Then this was postponed to the end of March. Then the end of April, and now the end of June. The BRPs were ready to present their plan at the end of March; these extensions are an ominous suggestion of government interference. You have been emphatic about intervening in the business rescue process if the restructuring ‘is not in the best interests of SAA’.
No intention of relinquishing ownership
Deputy President David Mabuza told Parliament that government had no intention of relinquishing ownership of SAA during the business rescue process, because ‘South Africans love the airline’.
The Companies Act obliges the BRPs to act independently and act in the best interests of the company, not the Minister. Ultimately the BRPs’ rescue plan will reflect their independence, or not, in finalising SAA’s restructuring.
The Mail & Guardian (18 April) reported that Gordhan and Finance Minister Tito Mboweni disagreed about whether the government should continue to fund SAA’s restructuring — which is being costed at R7.6 billion.
Mboweni was clear that SAA, which has received a total of R31.7-billion in cash bailouts and government guarantees in the last five years, and is set to receive R16.5-billion until 2023, cannot continue to weigh so heavily on the government.
In mid-April the BRPs made a severance settlement proposal to the unions while they were shutting down the business, but the unions took the view that SAA could still be saved. As at 1 May the BRPs had asked unions to send alternative ideas or queries about their proposal to retrenchment by 1 May.
But what do we see on 1 May? We get this lyrical press release from Mr. Rantu which says that it ‘requires an absolute focus on becoming internationally competitive for safety, quality, and cost. It will not be the old SAA but the beginning of a new journey to a new restructured airline, which will be a proud flagship for South Africa’.
He went on: ‘The process that the Minister and SAA workers have embarked upon is bold and audacious. A Leadership Compact has been signed by all parties that commits to taking a new approach, to acknowledging that there will be a major performance-based culture change for all leadership, management and employees as the transition to a new airline takes place.’
In one guise or another
In other words, SAA will keep flying in one guise or another. It seems that no management is included in this plan. Where’s the board? The taxpayers will continue to be fleeced by a government they don’t trust. Is the ANC’s determination to implement the certain failure of socialism intimately tied to having a flagship airline to show off?
Rantu waxes delusional by suggesting that the government, by being strategic, can somehow steal a march on the big players: ‘In the Past (sic), the airline industry has been able to navigate its way through many difficult periods based on the known facts relating to the market, socio-economic, financial, skills and related issues. Now within months we have seen a virtual global collapse of the airline industry. Who would have foreseen that the giants of the industry such as Boeing, British Airways and Virgin would be struggling to survive and retrenching thousands of employees. We are now faced with the unknown post the COVID-19 pandemic and there is no precedent or certainty which can be followed in developing a new strategy. The parties will be pioneers in writing a new book.’
Gordhan believes that with ‘the fog of economic uncertainty descending, a new and bold approach is required if there is to be any chance that South Africa can retain vital airlift capacity and trade connections, through a strategic national asset, with both public and private sector participation, which is internationally competitive, viable, sustainable and profitable’. Rantu reveals that Gordhan has given the BRPs ‘very demanding timelines for the development of the Business Rescue Plan and parameters in order to determine what path the old SAA could follow’.
Rantu also advises that unions and the Department are ‘working together on a business model that deals with what a new national carrier of the future will be but also crucially how this can be achieved to ensure a competitive edge in safety, quality and costs in the sectors which SAA competes’.
‘In the best interest of our nation’
‘The shareholders and Union leadership recognise that there are going to be serious challenges to overcome. However, it is essential to build a leadership coalition which is robust and strong enough to find solutions, and establish the foundations of a new airline with a growth path in this uncertain environment, which are in the best interest of our nation and all its citizens.’ Let’s compare this to the private sector, which doesn’t have the privilege of endlessly being given people’s taxes to keep it afloat.
After 90 years, fashion retailer Edgars’ owner, Edcon, has applied for voluntary business rescue. At the end of April, the company had suffered about R2 billion in lost sales. The lost sales, including those resulting from social distancing measures, lockdown and extended lockdown, consumed the Group’s remaining cash.
When Level 4 was implemented, all 932 of Edcon’s stores opened to trade under a BRP. Edcon has 14 000 permanent and 25 000 temporary employees, all of whom will lose their jobs. Without meaning to sound callous, why should 39 000 Edcon employees lose their jobs, but 5 752 SAA staff and 2 367 SAA Technical staff shouldn’t because the minister can just take money out of the taxpayer piggy bank to keep them employed?*
Even more egregious is the case of Comair (see Financial Mail): a most successful private airline which has made 74 years of unbroken profit. It has had to file for business rescue because of Covid-19.
It has succeeded despite competition from the state-sponsored, bailed-out SAA; no taxpayer bailout for Comair. Irony? SAA owes Comair R800 million for anti-competitive behaviour! Gordhan’s resurrection plans are all the more outrageous.
How dare you, Minister!
*The great proof of madness is the disproportion of one’s designs to one’s means – Napoleon Bonaparte
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