June 22, 2020 / 8:16 AM / 14 days ago

South Africa to oppose SA Airlink's bid to halt SAA creditors meeting

JOHANNESBURG, June 22 (Reuters) - The South African government on Monday said it planned to oppose an application by regional airline SA Airlink to put South African Airways (SAA) into provisional liquidation and prevent a meeting of SAA’s creditors to discuss a restructuring plan.

State-owned SAA went into a form of bankruptcy protection in December and since then state-appointed administrators have been trying to see what they can salvage.

SAA has failed to turn a profit since 2011 after expansion into competitive, loss-making global routes. Its problems were exacerbated when the airline had to suspend commercial passenger flights in March due to COVID-19 crisis.

SAA’s creditors were due to meet on Thursday this week to consider a proposed business rescue plan for the airline.

But the Department of Public Enterprises said on Monday it had been notified of a court application by SA Airlink to stop the meeting taking place and that unions separately had taken action to stop the meeting.

SA Airlink and the unions - which include NUMSA and SACCA - did not immediately respond to requests to comment.

The unions have rejected job cuts proposed to rescue the cash-strapped airline.

The current restructuring plan, which would involve laying off about 90% of staff leaving just 1,000 jobs, will cost at least 10 billion rand ($575.49 million). That is on top of the 20 billion rand that has been spent just keeping the airline afloat in the past three years.

The ministry also said it would approach the court to oppose SA Airlink’s application that SAA be placed under provisional liquidation.

“It is disturbing that a competitor of SAA, which is 100% privately owned, as well as two labour unions, who should be acting in the best interest of their members, are seeking to destroy SAA by forcing a liquidation through the courts,” the Department of Public Enterprises said in a statement.

Rescue efforts for SAA have been the subject of fierce wrangling between the government, which wants SAA retained as a national asset, and the administrators who took over the airline in December after almost a decade of financial losses. ($1 = 17.3766 rand) (Reporting by Tanisha Heiberg. Editing by Jane Merriman)

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