The cash-strapped South African Airways should undergo a business rescue plan instead of liquidating the airline, the South African government said on Thursday.
According to the Ministry of Public Enterprises, the business rescue plan the government has prepared would provide a better outcome than liquidating the state-owned airline from existence.
The SAA’s government-appointed Business Rescue Practitioners have scheduled a creditors’ meeting for 14 July to debate the rescue plan with other stakeholders like workers’ representatives before the plan is implemented, the ministry said.
“A 75 percent vote in favour of the plan would be required to carry the day. A vote against the plan would result in the protracted and costly liquidation of the airline,” the ministry warned.
This would negatively affect most of the workers, for their final single payment would only come to $2,000 no matter how many years they had spent working for the airline the ministry added.
Should the airline be liquidated, the process would see the appointment of a liquidator assigned to consolidate the company’s assets in order to raise capital which would be distributed to the creditors when the airline is disbanded, the ministry said.
As the shareholder on behalf of the government, the ministry said it was of the view that the business rescue plan was a viable alternative to liquidation.
It added: “This option (rescue plan) supports job preservation and the ability to bring the airline back from the brink to a position where some employees, labour unions and creditors, can continue to contribute to the South African economy and its integration into the global economy.”
NM/as/APA