Unions respond to SAA severance package offer

Mixed bag: employees’ contracts would be terminated, with ‘unguaranteed’ severance packages paid out over time.
NOT JUST A NUMBER. Lerato Molobi has been a flight attendant with SAA for the past 20 years. She volunteered for the mission to repatriate South Africans from Wuhan City in China in March, saying she knew it was something she had to do ‘the minute SAA asked’. Image: Supplied

Labour representatives at South African Airways (SAA) have given a mixed response to the severance package proposal by the airline’s business rescue practitioners (BRPs). 

On Friday SAA’s unions received a draft settlement agreement offer open to all of SAA’s 4 708 employees that would see the termination of their employment contracts by April 30 in exchange for unguaranteed severance packages. 

Read: Cash-crunched SAA proposes termination of employee contracts

At least one union has put out a counter-offer to the proposal with the aim of saving some jobs, others are consulting lawyers about the implications of signing the agreement, and two unions have distanced themselves from the process altogether. 

The airline’s five-month business rescue attempt has been crippled by funding challenges that were exacerbated by the unprecedented global response to the Covid-19 pandemic. With countries instituting travel restrictions, airlines across the world were forced to ground their aircraft.

Agreement lifeline for labour

The R5.5 billion in post-commencement funding the airline received at the start of the rescue process has run out.

The proposal for severance packages comes after Public Enterprises Minister Pravin Gordhan told business rescue practitioners (BRPs) Les Matuson and Siviwe Dongwana that their request for a further R10 billion to sustain the process would not be approved – a move that seems to have signalled the impending end for the airline.

Without funding from the government, the BRPs have no choice but to wind down the business to avoid liquidation.

In a liquidation, some of SAA’s creditors’ claims would take preference over employees.

The mutual agreement to terminate employment with defined retrenchment benefits may be in the best interests of SAA’s employees, as it would be secured ahead of the creditors should a liquidation become necessary.

For those who do not accept the agreement, the current Section 189 retrenchment process will continue.

‘Appalling proposal’

Deputy president of the South African Cabin Crew Association (Sacca), Advocate Christopher Shabangu, has “completely distanced” the union from the draft agreement. Shabangu said he was surprised to see the union’s name on the document, because neither it nor the National Union of Metalworkers of South Africa (Numsa) have ever been involved in the “sham” Section 189 process. 

Sacca and Numsa have been vocal about not participating in the retrenchment process, accusing the BRPs of not constructively engaging with labour on the process, as Matuson and Dongwana had reportedly not given them a clear plan for the airline’s restructuring. 

Read: SAA and labour to resume talks over retrenchments

Shabangu said the two unions are now engaging the shareholder (government), represented by the Minister of Public Enterprises, on alternative plans to save the airline. 

“The [BRPs] are asking that R10 billion should be put in without a clear plan – it’s carelessness,” he said, adding that the rescue practitioners should excuse themselves because they have failed and have not shown any attempt to rescue the business. 

He said the union would not place a counter-proposal on the table and described the severance package proposal as an “appalling” document that served to threaten workers and create anxiety instead of dealing with how to rescue the airline. 

Shabangu said there was no concrete severance package in the offer – instead it is “a promise” of packages if the airline sells selected assets in the next 24 months.

“We don’t even know the claimants that they have and how much money they will make out of the sale[s],” he said.

“We cannot make [counter] offers on the basis of such a flimsy proposal.” 

On the other hand

The National Transport Movement (NTM) is the first union to issue a counter-proposal, which its president Mashudu Rapheta said would realise a “drastic drop” in the airline’s expenditure, securing its future and many jobs. 

NTM’s proposal calls for the insourcing of all services such as cleaning, bag handling and bus services from aircraft to the terminal, which it says will realise savings of about R10 million. In addition, the union has called for the transfer of some employees to SAA subsidiaries such as Mango Airlines. 

The union has also called for the cancellation of all fixed-term contracts and consultant agreements by April 30.

Where job cuts are necessary, NTM suggests that early retirement be granted to all employees over the age of 55 with an added incentive like a six-month salary. It says the company could also explore retirement for those employees who are 50 years old and have been at the airline for 25 years. Voluntary severance packages should be offered to the rest of the staff of SAA by giving them three weeks’ remuneration for every year employed.

But Solidarity’s chief executive Dirk Hermann said that while proposals around selection criteria and alternative ways to avoid retrenchments have merit, the situation at the airline has gone past that as an option. 

Read: SAA could face liquidation as state funding dries up

“The fact that they are suggesting an agreement in this type of format, on face value it shows that they do not have the money to even pay employees,” said Hermann. 

“If they had the money we would have continued with the Section 189 process, because on conclusion there would be money for retrenchment packages.” 

In a letter to creditors, Matuson and Dongwana said restructuring the airline would cost at least R7.7 billion. This would cover the costs of concurrent creditors, restructuring, recapitalisation, and the retrenchment costs. 

Payment uncertain

Solidarity, along with the South African Airways Pilots’ Association (Saapa) and the South African Transport and Allied Workers Union (Satawu), are going through the proposal with their legal teams. 

With no money from the government, the severance packages of SAA’s employees would be dependent on whether the company is able to sell some of its assets – such as property, aircraft parts and its trade debts – within six to 24 months.

The severance package will include one week’s pay for every year of service, a month’s salary, payment for outstanding leave, and a 13th cheque if an employee is entitled to one. 

Employees have until Friday to accept the agreement to terminate contracts by April 30. 

Saapa said it is concerned about the proposal, which would remove all collective agreements and the rights of labour in any revitalised SAA.

“It is a very weak and uncertain offer for labour, who will end up out of work for possibly more than a year before any severance payments will be forthcoming,” said Saapa.

“Nor is there any real certainty of how much severance pay labour will ultimately receive.”

SAA’s ability to cover the full cost of the severance packages is also dependent on whether it can sell the assets at a value that will be able to cover the packages. Once such sales are concluded, the packages would be paid on a monthly basis for six months. Should the company not be able to do this, employees will receive a proportionate amount of their package and can sue the company for any outstanding money.

“It is disingenuous of the company to hold a gun to labour’s head with the threat of imminent liquidation to take the deal or [get] nothing attitude,” said Saapa.

With no mention that government may foot the bill for the retrenchment packages, the union said it would be “very disheartening” if the shareholder would allow nearly 5 000 workers to be retrenched with no money at the moment and the possibility that the money promised from the sale of assets may not materialise.

On Saturday the Department of Public Enterprises responded to reports about the severance package proposal by reiterating its commitment to “a dynamic and viable aviation sector”.

It also made it clear that no agreements to “full-scale retrenchments” had been concluded.

Gordhan is expected to present a report on the airline to President Cyril Ramaphosa and his cabinet on Monday.

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It seems as if the unions do not understand that there are no money. Die geld is op. Now they are full of clever plans. In the past they had no clever plans when clever plans were needed. Amd they were not willing to listen to any plans at all.
But, this mess at SAA is management’s fault, not the cabin crews. My heart bleeds for the cabin crews.

The cabin crews hastened the demise of their employer by gleefully embarking on a suicidal strike only a couple of months ago. Had you forgotten?

Maybe they should consider going on strike!

Agree Chris. So sorry for the workers but the unions HAVE to accept a simple truth: when there is no more money, there is no more money. Finish and klaar. We can’t throw billions more into a failing airline, which was already destroyed during the Zuma/Gupta era. People are starving; that’s much more important than keeping an elite airline running. And to propose keeping jobs for cleaners or baggage handlers is plain stupid when there are NO MORE FLIGHTS. Time for greedy unions to wake up and smell the coffee.

YES:

Unions just learnt the hard way that
• unprofitable SOE’s are *not* a priority of taxpayer money.
• SOE bailouts are taking taxpayer money away from other areas (that need the money more).

it took a Global Epidemic to teach them Economics 101.

Another part of a once proud and functional South African company totally destroyed by the ANC communistic leeches!!!

VIVA ANC VIVA !!!!

The ANChave broken much more than just SAA.

Unions, there is no money left for employees. First paid are secured creditors then employees. The professional liquidators will I suppose get their chunk.

Large chunk for telling us what we knew years ago.

The sad pathetic part of this is that the unions never allowed anyone, ie the CEO’s appointed to turn it around, the chance to rightsize the labour force, right size salaries, clean it up to operate at a profit.

It supplied a need, so with the correct management it should have worked. Even to the point of one cabin crew per internal flight and bring your own sandwich to eat.

I am sure that everyone working there would have taken a haircut on salaries just to keep their jobs. Now it is not a haircut it is a scalping.

if you haven’t got a ticket you can’t ride. The trade unions are fighting for their survival at the moment. No jobs, no unions membership fees, no union.

No Unions is even better than no SAA : They are a bunch of thugs

It is because of Unions you enjoy weekends and public holidays off. And if you do work over weekends you receive compensation. So go easy on Unions.

Their job is to protect its workers; however in SA they have dictated how the company is run. Like SADTU

Oh yes, the unions. Doing what unions do best in this country, namely, losing their member their most valuable asset, the jobs.

The unions have unionised the nation to death.

I ma reminded of what happened back in the old Bophutatswana where they had an industrial township in Bodirelo, not far from Sun City. Businesses were given tax cuts to manufacture there. Then the unions turned up with their usual arrogant war-cry: ‘WE DEMANDDD!!!’ A cutlery manufacturer was threatened with ridiculous wage hikes. So one weekend he quietly loaded all his factory equipment onto trucks and simply left town. Next week the stunned union found an empty factory. So they organised a strike! Fat lot of good it did them. More of the same is happening right now. When will they ever learn…..

It was inevitable that there was going to be an opportunistic lunge for bailout cash from some interested party at SAA. The BRPs, were hopefully, only going through the motions of asking for R10 billion. They could not have seriously expected any cash being chucked their direction in any, much less current, circumstances. For some time the only profitable unit at SAA has been the two old 747’s parked at Rand Airport for display. Buyers for SAAs distressed assets are going to be able to drive a hard bargain as Boeing & Airbus have a whole stack planes going at firesale prices in the Mojave Desert.

As Oliver Cromwell said in 1653 “You have sat too long for any good you have been doing lately… Depart, I say; and let us have done with you. In the name of God, go!”

True – it is similar to when checkers bought ok for R1 or one cent – can’t remember – saa liabilities simply are more than its assets – why the hell will anybody pay for something that they have to pay again its current creditors – don’t tell me there is any saa goodwill left on the books that could be sold – the saa as a trade name was worked into the ground by the anc & co

If they just want to sell the ancient planes as “assets” the government still sits with the liabilities – On top of it, after covid19 and an economical upswing the whole world will be flooded with brand new / more economical planes – old stuff no market

I feel sorry for the employees but closing down SAA means at least one hole in this sinking ship can’t leak anymore. The cadres can’t plunder a company that doesn’t exist anymore. That is the only good thing which came out of all of this.

Buyers are going to steal whats left, SAA is desperate for just a few million.

This will be the breaking of the unions, if the masses see money going to unions instead of food for them they will destroy this country. maybe, just maybe PG and others will see that.

Worst case scenario, give them the food money thinking only of the elections next year. Just like the JoJo tank fiasco, taken 25 years to give out JoJo tanks. Oops no pipe for water, never mind lets use the most expensive way possible, a tanker. In a years time you will find JoJo tanks all over the countryside with holes in them, blown by the wind etc. But all to secure votes next year, look what we the ANC did for you.

The rescue practitioners did very little to rescue SAA. SAA is a failure due to a bloated staff, tender corruption, SAA technical corrupt, bloated and overpaid board, and lastly poor aircraft routing( exampe – dropping Cape Town/ London route).
Correcting the purchasing of Aviation fuel directly and not through a bloated BEE scheme will save billions alone.
I reckon business rescue was the easy way out as to not expose all those corrupt BEE tender deals over the past 22 pdd years.
The Rescue practitioners did nothing to reduce staff headcount, cancel contracts etc, which shows they were appointed by Gov for one purpose only.

This is truly a disastrous state of affairs for not only the employees but for the country as well, as it is not only the loss of employment it is also a huge loss in terms of the country selling its brand in the international arena.

This news not only leaves an extremely bitter taste, but also puts an indigestible mass in one stomach considering how the ruling party as plundered this once magnificent SA show piece. Thousands of people are now losing their jobs due to a greedy few. It is high time that these greedy few are brought to book! Mr Ramaphosa it is high time that you stop spouting lip service to fighting corruption!

Until you the people of SA realise that the ruling party that you blindly continue to re-elect are there to service their own selfish needs and not that of the people of the country.

Come on SA wake up and rid yourselves of the leeches that take your jobs and the food from your tables. SA is doomed to the same fate that Zimbabwe now lives on the current elective path. The ANC may have been your initial salvation, however it is no longer the saviour you believe it to be.

Wake up SA!

Send the termination letters and let them join the UIF queue.

that’s the only disadvantage: when saa doors close for once and for all, all employees get a severance package and thats it – does not matter how good or how long the employee worked for saa – it boils down to the cadre employed employees cost the total saa 4000+ work force their work – would like to see how the now very concerned unions would handle this one if their organisation was in the private sector and flooded with cadre employees whilst not even capable to generate enough income to break even.

have a strange feeling eskom is in the same boat – probably not 100% liquidated, but with the heavy duty pruning shears out for cadre employed pals

What a time for an asset sale – when no other airline is in a position to buy anything.

And although I feel for some of the employees, most must shoulder the blame. Was it not your union, through its affiliation with COSATU, supported the ANC regime to be in a position of putting in place consecutive boards an executives that mismanaged (and steal from) the organisation? Come on man up, take some of the blame.

Oh yes, causality was never a strong point of a communist.

Who do these Unions think they are kidding? THERE IS NO MORE MONEY. So where do you expect it to come from now that you’ve decided on all these elaborate payments that must go to the employees?

There is no guarantee on what exactly SAA will get for their sold-off assets at the end of the day!. Time to pull the plug on an airline that has been nothing more than a bottomless trough of extreme losses for many, many years!

To me what is more frightening than just the demise of SAA and possibly other SoE’s is that SAA is a microcosm of South Africa today and its finances. Why people are worried about SAA when they should be really worried by the manner in which this government is destroying the country

Suggest that retrenched worker turn up on Zuma’s doorstep and demand that he pay their salaries. The rot started with him. Time for payback now, Zuma.

This is the start of the attitude adjustment process for the unions. When this storm is over, they will have changed from demanding to begging.
it’s way way overdue.
A job will be a privilege, not a right.

With lots of planes for sale I wonder what the value of a plane is? Aluminum market going to have a downturn!

Chickens.Home.Roost – boom

Let’s see who wins the staring contest: the BRPs or the government. Usually the government blinks first. What happens to all the government’s loan guarantees if SAA is liquidated. If R20 billion rands of loan guarantees become due at liquidation then “advancing just” R10 billion might be an option.

SAA will never come right, with 10 billion or 100 billion.

When *reasoning* is determined by who’s back is against the wall.

End of comments.

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