SACP calls for decisive resolution of SAA’s financial, operational and structural situation

28 May 2020

The South African Communist Party (SACP) calls upon government to urgently ensure that the financial, operational and structural situation facing the South African Airways (SAA) is decisively resolved. The business rescue practitioners should take into account the positions and responsibilities of the democratically elected government as both a shareholder and a major creditor of SAA (also taking into account government guarantees). In particular the collective position adopted by government to rescue SAA must consistently be articulated and supported by all ministers involved without exception, in order to enable the turnaround of the national airline.

In ensuring that the situation facing SAA is resolved, immediate attention should be placed on protecting the rights of workers and restoring operations in line with strict adherence to national lockdown and international coronavirus (Covid-19) containment requirements. The non-payment of wages should be resolved as a matter of urgency, including within the framework of the interventions that government has put in place to offer relief to companies and workers severely impacted by the Covid-19 pandemic. The SACP expresses its solidarity with the workers and will continue to work directly with them and the trade union movement, and calls for greater worker and trade union unity.

Airlines across the world are among the companies severely impacted by the Covid-19 pandemic. Globally, governments are actively intervening to rescue their national airlines. The strategic importance of the aviation industry in international trade and in building an integrated public transport system cannot be overemphasised. This should include affordable flights for the working class and radical reduction of road accidents and fatalities.

Building a capable democratic developmental state with its own capacity is crucial, including in the aviation industry as part of eliminating underdevelopment, the legacy of apartheid spatial uneven development, and pioneering an integrated, affordable, safe and reliable public transport system. One of the key lessons that the Covid-19 pandemic has brought to the fore is in fact the need for a capable democratic developmental state with extensive intervention in the economy and an active role in taking forward development in the interest of the people, the majority of whom in our country is the working class and poor.

In South Africa, the National Treasury is actively involved in offering relief to private sector companies with a turnover of R300 million or less, through among others the R200 billion Covid-19 loan guarantee scheme. The private profit sector did not condemn the intervention, being bailed out, but warmly welcomed it. In its Covid-19 loan guarantee scheme leaflet, the National Treasury states that “profits will be used to offset any losses that the scheme makes. If the scheme suffers any further losses, these will be absorbed by the banks themselves, capped at 6% of the size of the loan”, and that “Any further losses will ultimately be covered by the fiscus.” There is therefore no reason in principle why the state as a shareholder cannot intervene and rescue its own – state-owned enterprises (SOEs).

Furthermore, it was very clear from the outset, before SAA was placed under business rescue, that the national airline was in a position where it could be turned around. To this end the SACP preferred a state-led turnaround process. What SAA always needed is a coherent whole-of-state aviation industrial policy, strategy and approach, and good governance as well as adequate support from particularly the National Treasury in the form of developmental funding and necessary guarantees, ensuring that it is adequately capitalised and on a sound footing to contribute to the national imperative of transformation and development. In this regard, on 26 February 2020, when delivering the Budget Speech, the Minister of Finance Tito Mboweni assured the nation that government would provide adequate support to the rescue and turnaround of SAA. He said: 

‘Over the medium term, Government has allocated R16.4 billion to settle guaranteed debt and interest. The associated restructuring costs will be reprioritised within the Budget. It is the very sincere hope of many that this intervention will lead to a sustainable airline that is not a burden to the fiscus.’

The SACP is calling upon government to give more decisive leadership, taking into account that SAA remains in a position where it can be turned around. The SACP reaffirms the strategic approach adopted by the Alliance for the restructuring of SAA in order to emerge with a viable and growing national airline – as a product of the SAA restructuring process.

Since SAA was placed under business rescue process, the decisions announced by the business rescue practitioners in public tended to move away from the original objective of a rescue process, towards the so-called orderly winding down or liquidation (two sides of the same coin!). SAA was placed under business rescue a full six months ago. To this day there is no business rescue plan or turnaround strategy. In addition to their gross display of inexperience in turning around airlines, their practices have not given confidence that they will rescue the national airline. If there is one stark outcome of their work, that is the grounding of SAA. The business rescue practitioners should accept this appraisal and mend their ways.

In the media, especially in private profit-driven or embedded media circles, there has been relentless neoliberal lobbying and activist reportage for the liquidation of SAA and for the state to not support SOEs but support private profit interests. This uncaring attitude towards workers (who face a job loss bloodbath) is linked with an imperialist-driven structural reforms agenda – in opposition to radical structural transformation of the economy. The agenda comprises measures to suppress the rise of democratic public control, weaken and replace state involvement in the economy with the monopoly of private profit participation and competition for dominance in capital accumulation. 

The working class and poor, who command no capital and have no means of production of their own, must unite and rise against the exploitative greed. The SACP will deepen its role in the struggle to secure working class victory and social emancipation, and will not back down on its commitment to rescue the airline and build democratic public control in our country’s economy!

Issued by Alex Mohubetswane Mashilo, Central Committee Member: Head of Media & Communications, SACP, 28 May 2020