Public Enterprises Minister Pravin Gordhan has instructed the South African Airways (SAA) business rescue practitioners (BRPs) to extend the deadline for employees to accept retrenchment packages, while the state buys time to get funding or a buyer to enable the process of restructuring of the airline to resume.
The final deadline for employees to accept severance packages is Monday, May 11, with BRPs Les Matuson and Siviwe Dongwana warning that the possibility of any further extensions is unlikely.
On Saturday the Department of Public Enterprises’s acting director-general, Kgathatso Tlhakudi, said government and labour at SAA had signed a compact to allow a smooth transition to a “new SAA” through sacrifice and collaboration on the new business model. Tlhakudi said the “bigger prize” of the compact would be saving the majority of the jobs in the SAA group and the 60 000 jobs in the industry as a whole.
Tlhakudi explained that government is expecting that the dissolution of the old SAA and the emergence of a new airline will “unfold within the business rescue [window] despite challenges we’ve had to date in the production of the business rescue plan.”
The department has employed the services of an international aviation consulting firm to assist in developing the framework of the new airline and expects this to be concluded in the “next few weeks,” said Tlhakudi.
The department has already indicated that the new airline would be funded through a number of options, including strategic equity partners, funders and the sale of non-core assets. Tlhakudi said “private capital” would be used to realise the business as well as provide managerial expertise.
In order to give the government room to “properly explore” the funding options – either for immediate guaranteed funding that would allow the BRPs to “reconsider the perspective of a restructured SAA” or the sale of the business or assets to another party – Matuson and Dongwana extended the deadline again.
In a letter to unions and non-unionised employee representatives, the BRPs said they would offer labour an opportunity to accept the agreement by 10:00 on Friday, May 8. Should organised labour not accept the agreement the BRPs have reserved their right to extend the agreement to individual employees between May 8 and 11.
The revised severance package agreement effectively gives employees an additional but conditional week’s pay for every year of service.
This means the final offer is two weeks’ pay for every year spent at SAA, one month’s notice pay, reimbursement for outstanding leave and a pro-rated 13th cheque.
The BRPs have also added an “escape clause” which makes it clear that no employee will be prejudiced if they sign the agreement on or before May 11 and government subsequently unlocks funding to reinstate SAA’s solvency by June 30.
These employees would be re-employed and their old contracts reinstated. The retrenchment process that was previously underway to cut half the airline’s staff would also continue.
The agreement further states that the second weeks’ pay will only be payable should the BRPs be able to sell the company’s assets at a value that is sufficient to cover the packages, or if the shareholder, being the state, provides enough money to cover the packages without the sale of any SAA assets.
It also hangs on the express approval by creditors in the business plan that will be published by the BRPs.
Who is taking it?
On Sunday Matuson and Dongwana said in a letter to workers that they would be opposing a legal bid brought by the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) asking the court to interdict the retrenchment process.
“If successful, it would further contribute to the financial and other challenges that SAA is facing and thereby prejudice all of SAA’s employees’ rights and benefits,” said Matuson and Dongwana.
The matter will be heard on May 7, a day before the final deadline to accept the offer.
The National Transport Movement (NTM), the Aviation Union of Southern Africa (Ausa), Solidarity and the South African Transport and Allied Workers Union (Satawu) had also requested the extension to May 8.
NTM said it has accepted the agreement in principle, saying it believes that it protects workers. Non-unionised management representatives have also accepted the agreement in principle.
Non-unionised representatives for other employees have rejected the agreement, stating that it “seeks to limit their rights, has no value and no definite date to repay retrenchment packages.”
No money, no pay
The BRPs have said that the airline will not be able to cover salaries beyond April 30. Since May 1, employees have been on unpaid absence even if they have leave days due to them.
Matuson and Dongwana have warned that not paying salaries will not allow the company to “continue indefinitely” because it still has to pay medical aid, pension and other social benefits.
For employees who do not accept the agreement through unions or other representatives by May 8, and who also miss the window to sign individually on May 11, the BRPs can terminate their employment for operational reasons.
Further, they will only be entitled to one week’s pay for every year of service as their retrenchment package.