Union wants ex SAA chief on board during business rescue

Former SAA chief executive Vuyani Jarana, who resigned in June this year, should be engaged in the business rescue process of South African Airways, believes Dirk Hermann, chief operating officer of the union Solidarity.

The union met with SAA's newly appointed business rescue practitioner (BRP), Les Matuson, and attorneys representing SAA's board on Friday. 

Solidarity and other unions at SAA have also demanded that the BRP initially suggested by labour representatives, Cloete Murray, must be involved in the business rescue process. 

Murray is known as one of the liquidators appointed to wind up Bosasa and 14 of its subsidiaries. Speaking to Fin24 on Saturday morning, he indicated he would be willing to assist if required, as in his view, it was a matter of duty. 

As for Jarana, according to Solidarity, Matuson indicated during the meeting that he would "engage with former SAA CEO Mr Jarana as soon as possible to see in what respect he could be of assistance in the process". 

Jarana, who is currently on a business trip out of the country, told Fin24 early on Friday evening that he was not aware of discussions about his involvement and had not been consulted about it. 

"So, I cannot comment about it at this stage," he said.

Fin24 attempted to contact Matuson, but was told he was not available. An emailed statement from his spokesperson indicated that stakeholders would receive updates on the business rescue process within 10 days.

Legal pressure

In Hermann's opinion, the decision to place the state-owned airline under business rescue was, in part, driven by legal pressure from Solidarity, who had launched a court bid to achieve the same outcome. Both SAA and government - as the airline's shareholder - had in the past indicated that they would oppose Solidarity's business rescue application.

Two of the largest trade unions at South African Airways, the National Union of Metalworkers of South Africa (Numsa) and South African Cabin Crew Association (Sacca) on Friday issued a statement to indicate their support of Solidarity's business rescue process application lodged in court on November 21, arguing that the airline was "hopelessly insolvent" and nearing "total collapse".

Consultation row

Numsa and Sacca said they viewed SAA's decision to file for voluntary business rescue as "insincere, and an attempt by the board to retain control".

Fin24 reported earlier that unions were unhappy about a BRP having been appointed without consulting organised labour.

In a statement on Thursday morning, Public Enterprises Minister Pravin Gordhan said he envisioned that some existing lenders to SAA would provide R2bn in post (business rescue) commencement finance guaranteed by the state and "repayable out of future budget appropriations in order for the business rescue process to commence and to enable SAA to continue to operate".

Government, through National Treasury, would also provide an additional R2bn of post commencement finance in "a fiscally neutral manner," he said, among other planned processes. The department of public enterprises is the shareholder of SAA.

"We think it is of critical importance that all stakeholders are consulted in the business rescue process – and in that regard we engaged positively with Mr Matuson. Labour will play a critical role in the turnaround and in this regard Mr Matuson wholeheartedly agreed," said Hermann.

Massive scale

The union says its request that Matuson consider appointing a second business rescue practitioner was due to "the scale and uniqueness" of a state-owned entity being placed under business rescue.

Hermann believes aviation expertise is "absolutely critical" in enacting a successful turnaround for SAA. According to him, the suggestion that aviation experts be engaged to help, where possible, with the turnaround, was "well received".

"It was agreed that open channels of communication should exist between Solidarity and Mr Matuson as the process unfolds. Of critical importance is the independence of the BRP, because we have seen the results of government interference in the running of the airline," said Hermann.

"Solidarity was assured that Mr Matuson is wholly independent – and that he will be willing to take whatever steps he deems necessary to enact a turnaround independent of government." He said the union would keep a "close eye" on the process. 

Over the past 13 years, the flag carrier has incurred over R28bn in cumulative losses. In the medium-term budget policy statement, Finance Minister Tito Mboweni announced that the state would pay off SAA's government-guaranteed debt of R9.2bn over the next three years to honour the airline's contractual obligations.

In a statement issued earlier in the week, SAA said it the business rescue process was an attempt to "minimise the destruction of value across its subsidiaries and provide the best prospects for selected activities within the group to continue operating successfully". It would provide updates following the appointment of business rescue practitioners "as and when appropriate", it added. 

* Additional reporting by Marelise van der Merwe and Allison Jeftha 

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