Goodbye SAA: South Africa To Get A New National Carrier

South African Airways seems to have reached the end of the line. Despite clinging on to life for…

Goodbye SAA: South Africa To Get A New National Carrier

South African Airways seems to have reached the end of the line. Despite clinging on to life for the past few months, the airline is now just days away from either being wound down slowly or liquidated quickly, depending on the actions of its 4,700 employees. This would make way for a new national carrier, one which it is hoped will provide jobs for the many who are set to lose out with the closure of SAA.

South African Airways is days away from liquidation. Photo: Getty Images

End of the runway for SAA

South African Airways, almost a century old, seems to have reached the end of the runway. Discussions that took place yesterday between the Public Enterprises Department, SAA’s rescue practitioners, and workers unions suggest that the airline is on the verge of being liquidated.

Business Rescue Practitioners (BRPs) Les Matuson and Siviwe Dongwana had previously planned to liquidate the airline and had issued a deadline of the 24th April for workers to choose between terminating their contracts or liquidating the airline. However, they .

Now, it seems that a deal has been reached which will see SAA closed down and liquidated, and a new airline formed in its place.

The National Transport Movement (NTM) has alleged that the decision has been made to form a new airline during a meeting between unions and the Public Enterprises Minister Pravin Gordhan. In a statement to EWN, NTM president Mashudu Raphetha said,

“It is with great regard that after having had the meeting with the minister, the new airline will be born out of SAA. We have tried our level best to ensure that the airline still flies [and] we need to participate in the formation of the airline in order to keep most jobs.”

According to Raphetha, discussions about a new airline are already at an advanced stage and further details will be released soon.

Confusion at the unions

Although the message from NTM is abundantly clear, the same message doesn’t seem to have filtered through to the unions. The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crews Associations (Sacca), who jointly represent the bulk of the airline’s 4,700 employees, seem convinced that the government will swoop in with an eleventh-hour rescue package.

The two unions last night released a joint statement urging members not to sign the retrenchment agreements proposed by the BRPs. They accuse Matuson and Dongwana of spreading “misinformation and emotional propaganda,” saying that workers are facing “undue pressure” to sign the agreements. In the statement, the unions complain about,

“…the undue pressure these persons are placing on employees during this period of uncertainty and anxiety to sign hollow and conditional retrenchment agreements, tantamount to workers being forced to essentially relinquish their rights.”

Unions say workers are being pressured to sign. Photo: Getty Images

The unions say that the next 48 hours are critical in their mission to save SAA. Indeed, workers have been given until Friday, May 1st to sign the agreements. All of the 4,700 employees need to sign the agreement to terminate their contracts; if they do not, the BRPs will be forced to undertake immediate liquidation procedures.

With the termination contracts unsigned, SAA workers will forgo any severance pay. To claim their wages and any other pay they are owed, these people will be forced to join the queue behind other creditors of the airline. NTM has strongly recommended workers sign the agreement by Friday.

What do you think about the situation at SAA? Is it time for the workers to back down and sign the retrenchment plan? Let us know in the comments.

Source : Simple Flying More   

What's Your Reaction?

like
0
dislike
0
love
0
funny
0
angry
0
sad
0
wow
0

Next Article

Air India Bid Deadline Extended Until Late June

In light of current circumstances, the government of India has extended the deadline for bids for Air India.…

Air India Bid Deadline Extended Until Late June

In light of current circumstances, the government of India has extended the deadline for bids for Air India. The new date, June 30th, gives potential bidders two more months to submit an offer for the state-run carrier.

The government is hoping to fully privatize Air India. Photo: José Luis Celada Euba via Wikimedia Commons

More extensions on the cards

The government’s decision hardly comes as a surprise considering the current conditions. However, this could be the first of many extensions as companies and airlines deal with heavy financial losses. Many potential bidders for the airline, such as the Tata Group (majority owners of Vistara and AirAsia India) and Hinduja Group, will likely wait for their financial situations to improve before such a purchase.

Vistara A320neo
The Tata Group, which owns a majority of Vistara and AirAsia, is considering a bid for Air India. Photo: Raju Sundaram via Wikimedia Commons.

The coronavirus has forced carriers around the world into survival mode, including Air India. The airline has struggled to pay salaries and is hoping for a government bailout in order to remain afloat. With other airlines in similar situations, it seems unlikely any airline will be looking to buy Air India right now, or even in the coming years.

How lucrative is Air India?

An important question to ask in this difficult time for this industry is how lucrative Air India is. The Air India sale comes with a $3.07bn string attached to it, which is a percentage of the airline’s debt. This is in addition to its very large staff, outdated cabins, and maintenance issues. However, the airline does have a fleet of 128 aircraft (excluding subsidiaries), a majority of which it owns, and valuable slots at airports like Heathrow.

Air India Narrowbody
Bidders might be rethinking any investments in the aviation industry. Photo: Getty Images

The questions bidders will have to ask themselves is how valuable planes and slots are in a time when demand is nonexistent. Even though India is in desperate need of a new international carrier, the coming months will tell us how soon the aviation market in India, and globally, will rebound.

Overall

The coronavirus has undoubtedly put any large aviation deal in jeopardy. Just this week we saw Boeing terminate its deal with Embraer, and previously saw LOT Polish airlines pull out of its purchase of Condor. Even Jet Airways has likely lost any hope of restarting in these tumultuous times. While Air India is in a much better position than other airlines, primarily due to its backing from the Indian government, the coronavirus does change the calculus of any potential deal.

The coming months could see more extensions, as airlines recover from the current shock. We may also see deep-pocketed firms picking up the airline while competition is low and capitalize on this opportunity. With the aviation industry still grounded, only time will tell us how the demand for large airline purchases will recover.

What do you think of Air India privatization? Let us know in the comments below.

Source : Simple Flying More   

This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.