An urgent application by privately-owned regional airline Airlink to interdict a creditors meeting to vote on the business rescue plan proposed for South African Airways was struck from the roll in the South Gauteng High Court in Johannesburg on Wednesday.
Judge Leicester Adams ruled that main difficulty Airlink faces is that the relief it sought in the urgent application relates to decisions which will in any event be made at the creditors’ meeting on Thursday 25 June. Furthermore, the law determines that such a meeting has to take place within 10 days of the plan having been published. The Companies Act also provides for decisions on a review of the plan or further extention to be voted on.
The rescue practitioners, the Department of Public Enterprises, representing government as shareholder of the airline, as well as three unions, namely the National Union of Metal Workers of South Africa (NUMSA), the SA Cabin Crew Association (SACCA) and the SAA Pilots’ Association (SAAPA), opposed the application.
Earlier this year Airlink terminated the franchise agreement after SAA went into business rescue and failed to pay over more than R700 million of revenue for tickets issued on flights flown by Airlink.
Concurrent creditors like Airlink will only get 7.5 cents in the rand if the proposed rescue plan is accepted. In the view of Airlink, the rescue plan is not commercially viable, especially given the uncertain outlook for the airline industry after the Covid-19 crisis.
Airlink is also seeking to have the rescue process terminated, the appointment of the practitioners set aside, and apply for SAA be placed in provisional liquidation. If SAA is placed in liquidation it will lose its operating licences.
In his supplementary budget announced on Wednesday, Finance Minister Tito Mboweni did not make any mention of further funding for SAA. That pins the hope of saving the airline on finding a suitable equity partner.
In a radio interview on Wednesday morning, Kgathatso Tlhakudi, deputy director-general at the department of public enterprises, indicated that government would be willing to give management control to investors and only retain a minority shareholding in SAA.
If the rescue plan is accepted, government would have to come up with at least R10.3 billion by 15 July or the plan will be deemed as unimplementable.
UPDATE: The Department of Public Enterprises welcomed the judgment and said it hopes there will be no further delays to vote on the rescue plan. The department remains of the view that the plan can lead to the formation of “a viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services”.
“The government is committed to engage constructively towards the national interest objective of such an airline in a constrained fiscal environment, taking into account the impact of the Covid-19 pandemic on this situation,” it said in a statement….
