South African Airways retires its last A340-200 from active service

Five South African trade unions have agreed to accept new employment terms and headcount numbers included in a revised turnaround plan for South African Airways (SA, Johannesburg O.R. Tambo).

Ahead of a crunch creditors' meeting on Tuesday next week, Business Rescue Practitioners (BRPs) Les Matuson and Siviwe Dongwana revised a previous version of the plan wherein 1,000 staff will now be retained. At the same time, a further 1,000 will be placed on a Temporary/Training Lay-Off scheme for 12 months. SAA will contribute a maximum of ZAR4,650 (USD274) per month towards each employee's pension, Unemployment Insurance Fund (UIF), and company medical aid for those staff placed on Temporary/Training Lay-Off. The carrier will also offer voluntary redundancy packages to staff.

The overall total cost of voluntary retrenchments, 2,700 compulsory retrenchments, and contributions to pension, UIF, and medical aid in respect of employees placed on Temporary/Training Lay-Off will be up to a maximum of ZAR2.2 billion (USD129.6 million).

In terms of actual packages, pilots will be offered severance pay of ZAR1.96 million (USD115,500) each while cabin...

The future of South African Airways (SA, Johannesburg O.R. Tambo) has been thrown into further doubt after the South African Treasury reaffirmed that it had no intention of dolling out more public funds to the bankrupt state-owned carrier.

In a presentation before the Standing Committee on Finance and the Select Committee on Finance last week, Treasury recommended that SAA should be closed and that "no further action" was "required in terms of bailouts" except settling "guaranteed debt, as the entity is insolvent and BRPs have not released turnaround plans."

SAA's business rescue practitioners (BRPs) have hinged their turnaround plan on the government coming up with a total of ZAR10.3 billion rand (USD597.8 million) in funding by July 15. of the sum, ZAR2.8 billion (USD162.5 million) would be used for working capital, ZAR2.2 billion (USD127.7 million) would be used for retrenchments, ZAR3 billion (USD174.1 million) would go towards reimbursements for unflown tickets, ZAR600 million (USD34.8 million) would go towards general concurrent creditors, and ZAR1.7 billion (USD98.7 million) would be left to lessors.

However, a creditors' vote...

During a meeting on Thursday, June 25, South African Airways' creditors voted in favour of postponing a vote on whether or not to accept a restructuring plan put forward by Business Rescue Practitioners (BRPs) Les Matuson and Siviwe Dongwana.

The two said in a statement that 69% of the bankrupt carrier's creditors voted to reconvene on Wednesday, July 15.

"The BRPs could use this period to amend the plan to address the plan's deficiencies, continue negotiations with stakeholders to satisfy their conditions including consulting labour unions and creditors," they said.

As previously reported, Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) had sought to scuttle the meeting on the basis that creditors did not have the requisite information needed to make a fully-informed decision.

"We had sought to interdict the meeting and to have the SAA business rescue process stopped on the basis that the proposed rescue plan is implausible, treats creditors unequally, is opaque in explaining how it will be funded and that it is not the product of a truly independent business...

Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) has lost its bid to interdict a meeting of South African Airways (SA, Johannesburg O.R. Tambo) creditors scheduled for Thursday, June 24, after a Gauteng high court judge ruled the application to be nonurgent.

According to BusinessDay, Airlink's advocate argued that SAA's Business Rescue Practitioners (BRPs), Les Matuson and Siviwe Dongwana, had done "a complete U-turn" between the draft business rescue plan — which had proposed a structured wind-down — and the final one, which envisages that SAA be restructured using government financing.

SAA owes Airlink ZAR700 million rand (USD40.4 million) in unpaid revenue for flights Airlink operated as an SAA franchisee before and during the flag carrier's entry into business rescue. However, under the draft business plan published last week, lenders and lessors, whose loans are guaranteed, will see their debts repaid in full. At the same time, unsecured creditors such as Airlink will only receive ZAR0.075 (USD0.0043) on the rand from projected revenue flows over the next three years. Airlink has argued that the business...