NEWS
09/04/2018 07:16 SAST | Updated 09/04/2018 07:16 SAST

Solidarity Will Go To Court To Have SAA Placed Under Business Rescue

The trade union says there is little prospect of profits being made at the airline any time in the future.

Siphiwe Sibeko/ Reuters
Passengers board an SAA aircraft at the Hosea Kutako International Airport outside Windhoek in Namibia.

Trade union Solidarity will approach the courts in an effort to have South African Airways (SAA) placed under business rescue, Fin24 reported. Solidarity says taxpayers have subsidised the flailing airline for too long, and says there are no "reasonable prospects" of profits or growth being generated at the airline any time soon.

Solidarity reportedly wrote to President Cyril Ramaphosa, Finance Minister Nhlanhla Nene and Public Enterprises Minister Pravin Gordhan on Friday, inviting them to join the application. But they had not responded by Sunday afternoon.

According to Fin24, in its letter to Ramaphosa and the ministers, Solidarity said: "We are of the view that in order to sustain the job security of our members, in the interest of the taxpayer of South Africa and in the interest of SAA, that the institution of business rescue proceedings has become inevitable."

It is not clear when SAA plans to launch its application, but the parastatal will reveal its strategy at a media briefing on Thursday.

At the end of March, Parliament heard that SAA made a R3.7-billion loss last year, 71% more than the R2.2-billion loss it had budgeted for, according to TimesLive. The airline estimates that it will suffer losses of R4.5-billion for the current and following financial years, but foresees a return to profitability around 2021 as the effects of its turnaround strategy kick in.

Passenger numbers and fares declined owing to negative sentiment and increased competition, the airline reportedly said.

But SAA's newly appointed board chairperson JB Magwaza told MPs that he was confident the airline could be turned around, Eyewitness News reported. The airline has suffered from a lack of capable leadership until now and its organisational culture is poor, he reportedly said. Previous turnaround strategies did not work because of a lack of capacity at an executive level, Magwaza told MPs.