Restructuring consultants trying to save South African Airways

Consultants in charge of rescuing South African Airways (SAA) have announced that they will cut the airline’s whole staff from the payroll, following growing pressure from a variety of factors. 4,700 of the staff will be offered a severance package.

The airline’s operations are being managed by business rescue practitioners (BRP) Les Matuson and Siviwe Dongwana. Matuson is a restructuring and turnaround specialist who runs advisory firm Matuson & Associates, while Dongwana is a former Deloitte partner who is now the Founder & Managing Director of accounting firm Adamantem.

Last month, the pair requested more time from the government to administer the turnaround at SAA, given that Covid-19 restrictions are blocking any new revenue streams that might have helped matters along. Earlier this month, the government’s Department of Public Enterprises (DPE) announced that it would not longer offer financial support to SAA.

The government was previously giving financial support in the form of concessions on foreign currency borrowing limits, an extra budget for care and maintenance, steady funding to finance the restructuring process, and credit guarantees. All this support will now cease, as the government looks to cut its own losses in the current economic climate.

According to Matuson and Dongwana, SAA is unlikely to survive without government support, and the only option remaining is to let go of the airline’s entire staff. While there is talk of a severance package for 4,700 of the airline’s workers, the terms of this severance package depend on the funds that can be raised from the company’s remaining assets.

SAA has been in financial trouble for a sustained period now, putting pressure on government resources and causing unrest among taxpayers in light of the substantial resources that have been spent on sustaining the airline. Consultants have been flown in from across the globe in recent years to help restructure SAA, each with an exorbitant compensation package.

Matuson and Donwana were among a sea of BRPs brought on board towards the end of last year to rescue SAA. Global professional services firm Alvarez & Marsal was also brought on board at the same time, tasked with evaluating the airline’s finances.