South African Airways’ business rescue team on Wednesday warned that they would not have the money to pay the salaries of all staff for the month, and dismissed suggestions from the government that they had not managed the costs of the operation well.
“A leadership compact forum comprising the department of public enterprises and all the unions and non-unionised bodies at SAA proposed that there be pay cuts for the month of May,” Les Matuson and Siphiwe Dongwana said.
“However, SAA does not have sufficient funds available to pay salaries to all of its employees and, in fact, does not have sufficient funds to pay certain of its post-business rescue costs.”
“We are extremely pleased to see justice meted out in a prominent matter related to state capture,” said Stefanie Fick, OUTA’s chief legal officer.
The business rescue team were last week granted leave to appeal a Labour Court ruling that set aside retrenchment notices sent to SAA’s about 5 000 staff.
The latest statement from Matuson and Dongwana read as a point-form rebuttal of criticism directed at them by Public Enterprises Minister Pravin Gordhan, including suggestions that they had failed to spend the money availed to them in the wisest fashion and to provide a rescue plan aligned to the department’s stated aim of creating a sustainable airline.
They said they had in fact cut monthly running costs with savings of half a million rand. Roughly R10 billion was spent in the five months between December 2019 – when the airline went into business rescue – and April.
“Contextually, it is worth noting from the 2017 financial statements and the draft financial statements for 2018 and 2019 that the operating costs for SAA were at least R30 billion per annum amounting to a spend of R2.5 billion per month,” they said.
“Thus, looked at from this perspective, the average monthly costs incurred to continue to operate SAA for the BR five-month period amounted to R2 billion per month. The BRPs, therefore, succeeded in reducing the costs of SAA’s operational costs by R500 million a month.”
They defended the use of consultants, saying this had been one of their conditions for accepting the brief, given the specialised nature of the business and the historical precedent at the airline for doing so.
It had been one of the points of contention when Gordhan and the business rescue practitioners traded accusations in a tense parliamentary briefing recently.
Gordhan likened their differences to a “chicken and egg” debate, a metaphor for whether the department should release funding before a plan could be tabled or whether it was the other way around. He insisted that a plan needed to be finalised before funding would be given.
Matuson and Dongwana argued on Wednesday that lack of certainty over funding had hampered their work.
It was expected to be given in the national budget in February but did not materialise then or the following month when they engaged with the department about cutting loss-making routes.
Matuson and Dongwana said it was impossible to produce a business rescue plan within the initial timeframe as this coincided with the festive holidays, and once they were close to finalising a plan, the Covid-19 crisis, rendered it meaningless.
“Unfortunately, the draft business rescue plan for a restructured airline, which was near complete, could not be finalised due the impact of Covid-19 which nullified all the assumptions that were included in the income projections which were used to build the ‘sustainable airline model.'”
In the rumble of the ruins of SAA and the loss of taxpayers millions, many are happy to hear of the judgment that was passed down on Wednesday at the North Gauteng High Court, which declared Former South African Airways (SAA) chair Dudu Myeni as a delinquent director for life.
OUTA and SAAPA said in a joint statement that they made the decision to pursue this case three years ago and were determined to see it through.