I’m still in charge of SAA — Pravin Gordhan

SAA can be rescued — but if you were thinking about selling it, you would have to pay people to take the airline.

This is according to public enterprises minister Pravin Gordhan and the business rescue practitioners who were appointed to rescue the ailing national airline.

And Gordhan is still calling the shots at SAA despite it being in business rescue, it emerged on Wednesday.

The business rescue practitioners must still get his permission for fundamental decisions related to the restructuring of the airline.

This is because SAA is governed by both the Companies Act and the Public Finance Management Act, which requires the permission of the executive authority for a range of transactions and decisions.

SAA was placed under voluntary business rescue in December‚ before receiving R3.5bn in emergency funding from the Development Bank of SA last month.

It is the first public entity to be placed in business rescue.

Earlier this month, the business rescue practitioners said the airline would cease to operate flights to and from Port Elizabeth, and all other domestic destinations except for a reduced service on the Johannesburg-Cape Town route, from February 29.

At present, SAA operates about 15 flights into and out of Port Elizabeth every day.

Two weeks ago, President Cyril Ramaphosa said the government did not agree with plans to slash the number of routes flown by the embattled flag-carrier and that it needed to sit down with the airline’s business rescue practitioners to discuss the route cuts.

Responding on Wednesday to MPs, who asked about getting an equity partner for SAA or selling the company‚ Gordhan said: “Nobody is going to offer you anything for SAA right now.

“Some of you talked about selling SAA — you can sell it for R1.

“You would probably have to pay people to take SAA as it stands right now. That’s the honest truth.”

But Gordhan and his team left MPs with more questions than answers on the state of the airline — including the basis of their assertion that it could still be rescued.

Gordhan excused the business rescue practitioners right from the start of the joint meeting of parliament’s standing committee on public accounts and the portfolio committee on public enterprises, saying they were developing the business rescue plan and that it would be difficult for them to answer MPs’ questions about their work.

A presentation by the department’s deputy director-general, Melanchton Makobe, to the committee spelt out the grim reasons why SAA has failed for two financial years to table its annual financial statements and annual reports.

“If the annual financial statements and the annual report can be tabled‚ it will effectively be tabled on a liquidation basis‚ effectively placing SAA into liquidation‚” Makobe said.

Gordhan said this was the reality of SAA‚ a failing business.

He said tabling the financials would result in liquidation‚ which in turn would mean that “everything ceases”.

“Planes are on the ground. Staff are told to go home‚ you have no pay.

“Creditors are going to line up and, depending on what’s available as assets in the particular entity‚ you will get a bit of whatever is actually left‚” he said.

“I think the board endeavoured to avoid that scenario and that’s where business rescue comes in at the end of the day.”

Gordhan said the matter was not about compliance or non-compliance‚ but rather the reality of managing failing SOEs and how to deal with them in such a way that the government can save as much as possible‚ securing as many jobs as it can and whatever value remains in those assets.

“Otherwise we could have thrown up our arms and said ‘liquidate’‚ and that’s the end of the story‚” he said.

Gordhan promised to get legal opinion on the matter and also investigate whether there was a way his department could give MPs some financial information to indicate the true status of what was going on‚ as opposed to financial accounts.

Gordhan said the Public Finance Management Act  remained in force.

“In business rescue, the practitioner becomes the accounting officer, but under the [act], the accounting officer is accountable to the executive authority.”

This means that decisions such as the disposal of assets cannot be taken by the business rescue practitioners without government permission.

Other decisions, such as the cancellation of routes, are less clear cut.

But the act makes provision for a memorandum of incorporation, which is not a public document, in which a range of decisions are designated as requiring executive approval.

One of the business rescue practitioners, Les Matuson, who attended the meeting but did not speak, said afterwards that he agreed with Gordhan’s interpretation.

Gordhan said the respective responsibilities and authorities of the executive and the business rescue practitioners was a grey area that needed to be worked out.

“In some cases, the accountability leans towards the [Public Finance Management Act]  and in other cases to the business rescue practitioners,” he said in an interview afterwards.