It was either business rescue or liquidation, explains SAA board member
Cash-strapped South African Airways (SAA) has been placed under businness rescue.
The government says this is the only viable option to save the ailing airline.
SAA board member Martin Kingston says the decision was taken after extensive discussions with government and the airline's lenders.
According to Kingston, it was either liquidation or business rescue.
It became apparent that the only choices that were available to the board were to either place the company into liquidation or business rescue.Martin Kingston, SAA Board member
He argues that last month's week-long strike, which cost SAA around R50 million per day, was a major contributing factor to its dire financial situation.
SAA will also get a R2 billion lifeline from National Treasury in post business rescue commencement funds.
How will business rescue work?
A business rescue practitioner will be appointed in the next 24 hours to investigate whether there is a reasonable prospect of salvaging the airline.
If there is, and the process goes ahead, the government and the board will no longer have any control over SAA.
The business rescue practitioner will have the power to make autonomous decisions, explains Business Day deputy editor Carol Paton.
Kingston explains that the business rescue practitioner may decide to accelerate the proposed restructuring at SAA, which may lead to some job losses.
Paton says that government missed the opportunity to bring a strategic equity partner of on board to help get SAA to back on track.
Business rescue is an attempt to avoid the finality of liquidation.Carol Paton, Deputy editor - Business Day
Trade union Solidarity had last month filed a court application for SAA to undergo business rescue, but the airline had opposed the idea at the time.
Solidarity's Dirk Hermann has raised some concern over the airline's sudden about-turn, saying that business rescue will not work if management meddles in the process.
The worrying thing is that the motivation can be that they want to have more control over the process. If they want to control the process, it's going to fail.Dirk Hermann, Deputy general secretary - Solidarity
Listen to SAA board member Martin Kingston explain:
Listen to Business Day's Carol Paton:
Listen to Solidarity's Dirk Hermann:
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