SAA under business
rescue is protected
against legal claims from
creditors, which includes travel
agents’ override payments.
Newly appointed business
rescue practitioner, Les
Matusan, of Matusan
Associates, has 25 days to
file a business rescue plan,
although the timeline can be
extended. He is scheduled
to meet all stakeholders,
including creditors and trade
unions by December 21.
It is estimated that SAA’s
liabilities exceed its assets
by at least R13bn, with the
airline continuing to rack up
debts daily. Lead adviser
for business consultancy,
TaranisCo Advisory, Gerrit
Davids, says if the airline
were to make it through the
business rescue process as
a viable commercial entity,
payment of travel agent
overrides was unlikely.
There is a pecking order
that determines the hierarchy
of creditors to be paid first.
“Preference is given to certain
categories of claimants.
Commercial lender claims are
prioritised, while creditors,
whose unsecured loans predate the business rescue
process are considered at a
later stage. Agency override
claims fall within the latter
category,” he explains. He
recommends that agents start
to prepare a cushion to absorb
these losses.
Ceo of Asata, Otto de Vries,
says the association has
written to SAA’s business
practitioner on behalf of the
travel industry in order to
be recognised as a creditor.
“While creditors will ultimately
be dealt with individually by the
business rescue practitioner,
we have offered Asata’s
services as a conduit of
communication with the trade.”
“The industry can only hope
that SAA will try to honour its
contractual agreements to
keep the trade on its side and
support SAA,” says outgoing
md of Club Travel, Wally
Gaynor. He says the group
continues to encourage the
sale of SAA and has received
an overwhelming response
from its members supporting
this decision. “SAA should
tap into the industry’s goodwill
and reach out to the trade and
encourage it to support the
airline,” says Wally.
“[This decision by
government] signals a new era
of bold leadership. We are a
proudly South African company.
We hope that SAA emerges
from its current position as a
strong and sustainable airline
that meets the highest world
standards as SA’s national
carrier,’ says Tourvest Group
ce, Sean Joubert.
SAA is a key driver of the
economy, not only in respect of
tourism, trade, and job creation
but also in transportation
logistics, which in turn fuel a
number of other industries,
Sean adds. “The decision by
the government and the SAA
board to step in decisively to
save it can only be a positive
one, which we will do all in our
power to support.”
Flight Centre md of Middle
East and Africa, Andrew
Stark, says the group’s priority
is ensuring that the needs
of customers are met. He
adds that FCTG has been
withdrawing its support of
SAA over the last few years
and is therefore not relying on
override payments.
FCTG’s stop-sell on SAA
remains in place. “We take the
lead on assessing risk from
our insurer [TIC] and we need
to see what the plan is before
we change our position,” says
Andrew.
SAA continues to operate
schedules as usual. “In the
event of any changes, these
will be released in advance
to our trade partners though
a media release,” SAA’s head
of media relations, Tlali Tlali,
told TNW. Airlink and SA
Express are separate legal
entities related to SAA through
franchise partnerships, which
will continue to operate
as usual. Interlines and
codeshares will continue as
usual. “We will be working to
restore the confidence of our
partners, including insurance
companies, as we progress
through the business rescue
programme,” he says.
At the time of going to press,
travel insurance policies
remain unchanged, with
SAA excluded from supplier
insolvency cover.
“It is our intention to return
stability to the market. TIC has
made several submissions
to SAA and Mango in light of
the business rescue process
to gain clarity on how this will
be conducted,” says head
of travel insurance for Travel
Insurance Consultants,
Jason Veitch.
Uriah Jansen, md of Oojah
Travel Protection, which
administers Hollard Travel
Insurance, told TNW it would
only restore travel supplier
financial default benefit
cover for SAA tickets if the
airline was restored to a
position of solvency.
“All insurance has terms
and conditions attached to
it. Typically the travel supplier
financial default cover
automatically excludes
claims where there has been
public warning 14 days or
more before you bought the
policy that insolvency could
take place. Do not assume
your clients are covered,”
adds Uriah.
Bryte Travel Insurance, the
only travel insurer to offer
insolvency cover on SAA
tickets, told TNW it was
business as usual.
