Workers Movement Must Oppose Business ‘Rescue‘
Late on 4 December, the South African Airways board placed the state-owned national airline in ‘business rescue’, along with all of its subsidiaries – Mango, Air Chefs and SAA Technical. This is the first time this legal mechanism has been used for an SOE. It sets a precedent for how the ANC government will proceed with its onslaught against the public sector in the months and years ahead.
This a declaration of class war by the ANC government and its masters – the capitalist class, described even by capitalist auditing firm, PriceWaterhouseCoopers, as the most rapacious on the planet. And they would know! The war on SAA workers is a dress-rehearsal for the much bigger battles to come at Eskom, other SOEs and the public sector.
To avenge themselves for the defeat inflicted on them by the SAA workers’ strike, big business set about consciously creating the climate for business rescue. In acts of capitalist class solidarity, other players in the industry deliberately sabotaged SAA. Insurer Santam refused to provide cover for SAA tickets, followed immediately by the multinational, Flight Centre, suspending SAA ticket sales.
The capitalist media has since stepped up its pre-strike condemnation of the unions into a propaganda avalanche, welcoming this development and belittling the unions with the fiction that they brought SAA to this position by demanding decent wages and job security. There is a deafening silence over the siphoning-off of revenue through corrupt outsourcing and jet fuel supply contracts amongst others.
Introduced only in 2008, ‘business rescue’ is the fancy name for protecting the investments of the capitalist class in bankrupt companies. In the past, if a company went bust, investments could be lost. But not anymore! Section 128. (1) (b) (iii) of the Companies Act 71 of 2008 reads:
the development and implementation, if approved, of a plan to rescue the company by restructuring its affairs, business, property, debt and other liabilities, and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue in existence, results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company… [Emphasis added]
The latter is exactly what is happening here. SAA’s liabilities, including debt, exceeds its assets – the value of the planes etc. – by R13 billion. If the ANC government simply let SAA go bust – as they have clearly been contemplating – losses of up to R13 billion would have to be shared amongst their big business friends. Making clear their main motivation is to avoid this, SAA spokesperson Tlali Tlali, said that business rescue would give “a better return for the company’s creditors and shareholders, than would result from any other available solution”. The bill for the crisis would in other words be presented to the SAA workers and the working class whose taxes pay for SAA.
For the worthy cause of protecting the already super-rich, Pravin Gordhan, the ANC government’s Minister of Public Enterprises, was willing to turn the taps back on following the SAA board’s decision. He announced an immediate R2 billion cash injection from government and an additional R2 billion loan guarantee so that the SAA board could borrow more from the banks – who will of course earn more interest/profit on these loans. Desperate not to call it a ‘bail-out’ – which is exactly what it is – Gordhan has said the extra-money from government will be provided in a “fiscally neutral way” – i.e. by selling off SAA’s good assets, cutting budgets and privatising elsewhere in the public sector!
In addition, the ANC government has guaranteed the repayment of SAA’s existing R9.2 billion debt in full, i.e. without any ‘haircut’ on the interest/profit big business can expect to earn. Gordhan went further, explaining, that business rescue “…is the optimal mechanism to restore confidence in SAA and to safeguard the good assets of SAA and help to restructure and reposition the entity into one that is stronger, more sustainable and able to grow and attract an equity partner.” [Emphasis added] This is a clear announcement of the break-up, and at least partial-privatisation, of what will remain of SAA.
At this, big business is licking its lips. In an interview with the former-CEO of the privately-owned Comair aviation group, Business Day asked: “There’s speculation that … Comair, would do really well from an SAA implosion. Is that an erroneous assumption?” The former-CEO answered: “Look, it would; and the domestic airlines have been doing quite badly over the past few years because of the overcapacity. The market does require a correction to bring the industry back to proper profitability. There’s no question that the other airlines would benefit from it…”
The SAA debacle confirms the chaos the capitalist “free market” – worshipped by the ANC government – has created in the aviation industry as elsewhere in the economy. Comair made a profit of R471 million in 2018. Now they are set to make more money with SAA’s demise – all of which will go into the pockets of executives and shareholders, rather than the Treasury.
The privately-owned SA Airlink is going to court to challenge the Air Services Licensing Council for denying them routes to neighbouring countries whilst granting them to the government-owned SA Express using the excuse that SA Express has not tabled financial statements in parliament for the past two years – the airborne equivalent of the taxi wars to control routes!
Allowing all the new, smaller, so-called budget airlines into the market in a blind mimicking of disastrous so-called “international best practice,” has created anarchy, failed to lower prices, and excluded an impoverished working class from access to affordable air travel. The vultures are no doubt circling to obtain “strategic equity partner” status at a price they can now dictate to a bankrupt SAA. They will include not only the usual suspects from established big business in SA and internationally, but in all likelihood consortia are being put together by aspirant black capital to bid to feast on SAA’s flesh.
This underlines the point that the Marxist Workers Party has made – the key to ‘rescuing’ the SOEs and re-structuring them in the interests of the working class lies in extending nationalisation. The entire aviation industry should be nationalised under democratic working class control and the different companies integrated according to a democratic economic plan that reduces waste and achieves economies of scale whilst protecting jobs, wages and conditions. International experience shows that business rescue has a 67% failure rate. If SA Express’s rescue plan has failed, why should SAA’s succeed? Under big business and the ANC government’s watch there is not even a minimal guarantee about jobs at SAA and its subsidiaries.
Shamefully, the Solidarity trade union pushed for SAA to be placed in ‘business rescue’. They threatened to make the court application themselves as an “affected person” (because they have 240 members at SAA) if the board did not did enter ‘business rescue’ voluntarily. Solidarity is a trade union in name only. In reality it is a reactionary lobby group for a section of the white middle class and petty bourgeoisie, unfortunately, pulling in tow behind it a section of the skilled white working class. That the Solidarity leadership did this – and are boasting about it! – does not surprise us.
Unfortunately, the Numsa and Sacca leaderships, in a joint statement published on 5 December, announced that they had written to the SAA board in support of Solidarity’s application. They have also demanded that they be involved in… assigning the ‘business rescue practitioner’! This is the equivalent of a condemned person asking to have a say in who the executioner should be. The practitioner will be given dictatorial powers to oversee the restructuring of SAA in-line with the blatantly anti-worker ‘business rescue’ legislation.
It is a serious mistake for Numsa and Sacca to assume any responsibility for the break-up and privatisation of SAA – which is exactly what they are doing in adopting this position. This will be highly disorienting for the SAA workers, especially after their heroic eight-day strike in November (see SAA Workers Victorious in Wage Battle). But it will disorient the wider-working class too, especially members of the Saftu federation who are looking for leadership against job losses, austerity and privatisation. Underlining the severity of the crisis, the recently released third quarter economic ‘growth’ figures show a contraction of 0.6%.
In response to this, Saftu’s 4 December statement says that the:
Saftu Inaugural Central Committee has recommitted the federation to leave no stone unturned in establishing a broadest front of the working class formations including with left learning political parties to fight neoliberalism and austerity programmes. SAFTU has written to all the 147 organisations that attended the Working Class Summit in July 2018 to prepare for the biggest battle of our life time to defeat the programme that has seen more and more people getting unemployed, trapped in poverty and seen massive inequalities in society.
This will include a series of general strikes of this pro working class coalition that will involve the siyalala emadolobheni to demand the reversal of the programme that does nothing but worsen the crisis of poverty.
SAFTU calls on all the left forces to make the coming budget speech [in February 2020] a demonstration of unity of organised workers, the unemployed, youth, women formations and host of other issue based formations to demand the reversal of neoliberalism austerity programmes.
We welcome this statement. But how seriously will workers and communities take it, when Saftu’s largest affiliate, Numsa, has taken a position in favour of ‘business rescue’ at SAA, ultimately on the grounds that ‘there is no alternative’ to the same neo-liberalism and austerity Saftu is calling for mass action against? Likewise, what signal has been sent to Numsa members at Eskom, who have organised a joint programme of action with NUM to fight job losses and privatisation in the power-utility, about the seriousness of the Numsa leadership to fight?
In our 16 November statement, we warned that an economic crisis “…of such depth poses a stark choice for the workers movement.” Ultimately, it poses a choice between class collaboration, willingly playing the role of managing the working class on behalf of the bosses, to restore the economy on a capitalist basis, or mass struggle armed with a bold and revolutionary socialist programme.
The Numsa leadership must not make the mistake, consciously or unconsciously, of going down the path of class collaboration. The Companies Act 71 of 2008 allows for “affected persons” (which both Numsa and Sacca would qualify as) to make a court application to “set aside” the board’s resolution in favour of business rescue. We call on the Numsa and Sacca leaderships to reverse their position in favour of business rescue and urgently make such an application.
With the time this will buy, the SAA workers must be re-mobilised, appealing to all aviation workers, including for international solidarity given the nature of the industry, whilst also urgently bringing forward Saftu’s programme for mass action and mobilisation of other sections of the working class, especially the Eskom workers.
If, in response to this, the government reverts to its original plan to withhold funding and let SAA collapse – funding which they have now proved can be found with a click of their fingers – workers must be prepared to occupy the airports to protect SAA’s assets from the liquidators. Mass pickets could be mobilised by the trade union movement to support and defend the occupying workers. Such bold action is the only way to force the ANC government, and its big-business friends, back from this attack on the entire working class.
class battle between the ANC government and the working class has demonstrated,
as the Marikana massace did, that it is not possible to serve both the working
class and the bosses. As in 2012, so in 2019, the ANC has been compelled by the
class interests it represents to attack the workers. Above all this development
has made more urgent the necessity for the reconvened Working Class Summit to
place on the agenda the implementation of the first summit’s resolution, to
establish through mass action, a mass workers party on a socialist programme.
 “Solidarity Takes Credit for SAA’s Business Rescue Decision”, Luyolo Mkentane, BuisnessLive (5 December 2019)
 “Treasury and Lenders to Provide R4bn for SAA Rescue”, Carol Paton, BusinessLive (5 December 2019)
 “SA Express Rescue Plan Fails as Losses Widen Significantly”, Carol Paton, BusinessLive (22 November 2019)