South African Airways business rescue practitioners – Les Matuson and Siviwe Dongwana – have tabled a proposal to terminate the entire workforce of the airline by the end of April.
ENCA reported that the proposal, detailed in a document seen by them, gives employees until 24 April to accept the agreement.
This proposal comes shortly after Public Enterprises Minister Pravin Gordhan rejected the business rescue practitioners’ request for a further R10 billion for funding.
The business rescue practitioners said the airline cannot be turned around or saved without additional funding.
The airline was already in a dismal financial state before the COVID-19 crisis hit, with the current travel restrictions seen by many as the final nail in the coffin.
On 20 March SAA suspended all regional and international operations until 31 May in response to the COVID-19 outbreak and travel ban.
Without generating revenue, SAA is not able to operate or pay employees as it has no significant cash reserves.
ENCA said the proposal states that SAA’s assets will have to be sold, and the value of these assets will determine the packages which the retrenched workers will get.
Mismanagement and corruption at the embattled airline saw it rack up billions in debt in recent years.
South African Airways, which began operations in 1934, has recorded R26 billion in losses over the last six years and has depended on a series of state bailouts to keep operating.
The grounding of all of its passenger flights, aside from charters to repatriate stranded citizens, due to the coronavirus lockdown have further decimated its revenue stream.
Finance Minister Tito Mboweni has long advocated shutting off funding for the airline.
On Tuesday he cited the carrier’s closure as a way to save funds as the country deals with the fallout of the coronavirus pandemic.
“All options are now blocked to any form of real continuation of the airline,” said Peter Attard Montalto, head of capital markets research at Intellidex. “Basically the only option now is liquidation.”
The end of the road for SAA
Aviation specialist Phuthego Mojapele told ENCA this is the end of the road for South African Airways.
He said SAA has been on its death bed for some time, and even the billions pumped into the airline could not resuscitate it.
“We have reached the end of it. SAA does not have assets to justify its continued existence,” he said.
Mojapele said he cannot see how SAA can continue to operate, especially with the coronavirus pandemic which is ravaging the airline industry.
Looking at the SAA assets which could be sold to pay for retrenchment packages, Mojapele said valuable assets are hard to find.
The planes which SAA own are obsolete, and SAA Express is likely to be sold for “next to nothing”, he said.