South Africa to oppose Airlink's bid to halt SAA creditors meeting
JOHANNESBURG (Reuters) - South Africa plans to reject regional airline Airlink's application for the preliminary liquidation of South African Airways (SAA) and prevent a meeting of SAA's creditors to discuss a restructuring plan, the government said on Monday.
Airlink was a franchisee of the state-owned SAA for over two decades, an agreement that allowed the SAA to sell tickets and fly passengers on Airlink flights. SAA still owes Airlink some fees, which makes the latter an unsecured creditor.
SAA introduced some form of bankruptcy protection in December, and since then, government-appointed administrators have been trying to see what they can save.
SAA creditors should meet on Thursday this week to discuss a planned bailout plan for the airline.
The restructuring plan, which will lay off approximately 90% of the workforce and leave just 1,000 jobs, will cost at least Rand 10 billion ($ 575.5 million). This adds to the 20 billion rand that has been spent over the past three years to keep the airline afloat.
However, the Ministry of Public Enterprises announced on Monday that Airlink had filed a court request to end the meeting and that unions had taken special measures to end the meeting.
The proposed SAA corporate rescue plan also affects creditors (unsecured creditors) of the company, including Airlink, the private airline said in a statement Monday.
The plan will benefit the government, which "will own an unencumbered company that is financed by simultaneous creditors but is still economically insolvent," added Airlink.
The ministry said it would appeal to the court to deny Airlink's application to temporarily liquidate SAA.
"It is worrying that a 100% privately owned SAA competitor and two unions that should act in the best interests of its members are trying to destroy SAA by forcing the courts to liquidate them." the Department of Public Enterprises said.
In response, Airlink said it was not a competitor to SAA and had been the airline's franchisee for 23 years.
Airlink terminated the franchise agreement earlier this year when SAA paid no more than R $ 700 million in sales for tickets issued on flights flown by the private airline.
The unions, which include NUMSA and SACCA, did not immediately respond to requests for comments. They rejected the job cuts proposed to save the financially stricken airline.
The SAA's rescue efforts have been the subject of violent clashes between the government, which wants SAA to be preserved as national capital, 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 and Promit Mukherjee; editing by Jane Merriman and Pravin Char)
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