Fresh bid to stop struggling SAA from crashing

Solidarity is reviving its plan to have loss-making SAA placed under business rescue, but it is also still willing to engage Public Enterprises Minister Pravin Gordhan.

This comes as the struggling airline failed to honour its undertakings following a meeting with then CEO Vuyani Jarana last year when the trade union initially announced its plans to initiate court proceedings.

Solidarity’s court bid, which will likely we wrapped up in less than a month, forms part of a tax campaign against state-owned enterprises.

“We feel quite confident about our application and we hope this will be a precedent-setting case,” Connie Mulder, the head of Solidarity’s research institute, told Fin24.

“If we manage to put a state-owned entity under business rescue then this can serve as a solution to several other struggling SOEs that are draining the fiscus and finally to address tax plundering,” he explained.

Mulder said the initial application in 2018 was almost complete, but was suspended on the strength of Jarana’s leadership and the agreement, which included urgently finding a strategic equity partner and publishing financial statements on time.

‘Blocked by government’

“It would appear that both of these issues are linked to government interference,” he said. “Mr Jarana was committed but he got blocked by government.”

Jarana’s resignation was followed by that of SAA board chair JB Magwaza.

Mulder said although the business rescue application can’t be delayed, Solidarity is willing to engage with Gordhan.

“We are open to having talks with the minster but we have seen this merry-go-round at SAA several times, which has had several CEOs over the last decade.”

SAA is part of a list of companies that will get support from the country’s contingency reserve account, Finance Minister Tito Mboweni announced.

“We as South Africans and taxpayers can’t continue funding this.”   

Gordhan’s spokesperson was not aware of the looming court action when called by Fin24 on Sunday.

Fin24 will add the comment of SAA once received from spokesperson Tlali Tlali.

‘Stop the bailouts’

“Business rescue might be able to stop the losses, but it should be sold to private investors,” DA spokesperson on finance Alf Lees told Fin24.

He added that the government’s bailouts of SAA is a pointless exercise.

Lees said it was also concerning that it is appeared that bailout conditions for the SABC seemed for more stringent in relation to the SAA.  

“One wonders if SAA was still under National Treasury if a different picture would emerge,” he said.