It is disturbing just how willing people are to deny a painful reality. Especially politicians.
Pravin Gordhan, South African Minister of Public Enterprises is trying to stop SAA’s Business Rescue Practitioners Les Matuson and Siviwe Dongwana from proceeding with its liquidation. The two announced that SAA would halt all operations on Friday as there is no money to cover costs. Gordhan is dead set against liquidation, saying:
At the moment, it will not serve the business rescue process and that is also a matter of contention between the shareholders and the business rescue practitioners.
Gordhan is wrong. The Practitioners answer to SAA’s creditors first. They are in charge here, not anyone else.
And he’s farting into a hurricane. Last month Matuson and Dongwana approached Government for funding to cover SAA’s expenses, only to be refused as the money isn’t there. They also warned that if their plans weren’t supported, they would have no choice but to go to Court to take SAA into liquidation.
At this point, SAA’s liquidation is little more than a formality. Late last year, when Matuson and Dongwana were appointed, the airline was already in severe financial difficulty. Its staff complement was too high for its revenue, its management undermined by politics and Cadre Deployment, and its expenses skyrocketed by corruption. Even then, saving it was a long shot. In the current situation, where several airlines in a much better financial position than SAA are asking for government help and even going into receivership (like Virgin Australia), its end appears inevitable. Earlier this week, the privately-owned South African airline COMAIR went into Business Rescue. Prior to 2020, COMAIR regularly paid dividends to investors. If even COMAIR is entering Rescue, then the odds for SAA are now in “snowball in hell” territory.
As I said in my last post, it is flying in the face of reality to imagine SAA can be saved. Gordhan, SAA’s employees and Government now need to accept that there is no way to save SAA, and that any talk about founding a new airline from the remains of SAA is impossible, and will be for years.
Another politician who refuses to face facts is Gauteng CoGTA MEC Lebogang Maile. In March, he placed Tshwane Municipality under Administration. Nine days ago, a full Bench of the Gauteng High Court set aside his decision in a unanimous verdict and awarded costs against the Gauteng Provincial Government. The Judges rejected each and every argument raised by the Provincial Government’s lawyers and severely criticised Maile for not disciplining ANC and EFF Councillors who failed to show up to caucus meetings. A remote sitting to elect the new Mayor of Tshwane is scheduled to go ahead tomorrow.
Late on Thursday afternoon, the Gauteng Provincial Government held a press conference at which Maile announced he would be appealing the High Court’s ruling at the Constitutional Court. He also proclaimed that while the appeals process was underway, the Administrators would remain. Also, in typical ANC fashion, he accused the DA of racism.
The DA had anticipated Maile’s move. Shortly before the Provincial Government’s press conference, it held a press conference of its own where its mayoral candidate for Tshwane, Randal Williams, said:
We can bring a Section 18.3 application to ask the judges that the judgment must be implemented while there is an application for leave to appeal and also if the application is successful while the appeal process is ongoing.
Maile is living in fantasyland. A Section 18.3 Application would almost certainly be granted, meaning the Administrators would be removed. With regards to his appeal, that is almost certain to fail.
As mentioned above, the verdict by the Gauteng High Court was unanimous and fiercely critical of the action. When a verdict is unanimous, it’s a good sign that it’s solid, and thus exceptionally unlikely to be reversed by a higher Court.
One last thing. The scuttlebutt I’ve heard is that the ANC’s own Councillors in Tshwane were furious over the Administration decision, as it meant they lost their jobs. If it’s true, then Maile would likely face a rebellion if he proceeded with his appeal.
Like with everyone and SAA, Maile needs to accept the reality on the ground and realise that what he wants is a nonstarter. The longer you refuse to face a painful truth, the more painful it will be when you finally do.