The more than 4 000 employees of South African Airways (SAA) were officially informed on Sunday that they are being offered what is likely to be a final chance to sign a proposed termination of employment agreement.
In a letter to all unions and non-unionised employee representatives – seen by Fin24 – the joint business rescue practitioners Les Matuson and Siviwe Dongwana explain that the extension for the acceptence of the agreement is now 10:00 on 8 May. It had originally been 17:00 on Friday 1 May.
Furthermore, from 8 May until 11 May, the offer will be open for individual members – regardless of whether they are part of a union – to sign.
According to the BRPs they have been requested by Minister of Public Enterprises Pravin Gordhan and his department to grant an extension. This is to give the minister and Department of Public Enterprises the opportunity to explore the possibility of obtaining more funding to start “a new competitive South African airline in the future”, as was announced on Saturday.
The DPE said on Saturday it had roped in an international aviation firm to assist with the formation of a new airline to replace SAA. It indicated that Gordhan had successfully concluded a “leadership compact” with labour unions aimed at ensuring a “smooth transition” to a new SAA.
The name of the international aviation firm was not revealed, but the DPE indicated that private capital will play some role in the realisation of the new airline concept, including the provision of “airline management know-how”.
The DPE expects the winding down of SAA and the emergence of the new airline to unfold within the business rescue window.
The extended deadline will, therefore, enable the BRPs to ascertain whether there is “any immediate and guaranteed funding that would permit [them] to reconsider the possibility of a restructured SAA or the possible sale of the business or SAA assets to another party”.
If such guarantee of funding does not materialise by the extended deadline of 11 May, the BRPs propose that in cases where their latest agreement is not collectively or individually accepted, employment shall terminate on or after 12 May “for operational reasons”.
Those employees who have collectively or individually accepted the latest termination severance provisions, would have their position safeguarded by an “escape clause so that there is no prejudice in doing so if a better severance deal is later negotiated.
The escape clause also stipulates that, if the BRPs are put in a position to proceed with the restructuring of the airline on the basis of securing any further funding, these employees who signed the termination agreement will be considererd for re-employment.
Since the BRPs had indicated that after 30 April they would have no more funds to run the airline, employees have been put on unpaid absence as from 1 May.
The BRPs point out that even the cost saving due to the employees having been placed on unpaid absence, will not allow SAA to continue indefinitely, particularly since the company continues to pay for medical aid, insurance and other social benefits.
In response to the latest developments, Mashudu Raphetha, president of the National Transport Movement (NTM) called upon government, the BRPs and labour to work together for the common good of the country and all the people of SAA.
He has advised his members that NTM deems it in their best interest to sign the severance package agreement proposed by the BRPs. This is because NTM considered the advantages and disadvantages in this regard, drawing from its legal knowledge of the risks of not signing.
“NTM commits itself to create an enabling environment for its members to cash in their pensions and get full UIF payments, obtainable under normal dispensation,” says Raphetha.
“We would like to re-affirm our support for both the government and BRPs towards the realisation of the new SAA.”
NTM has in the past proposed a merger between SAA and state-owned regional airline SA Express, which has since been placed in provisional liquidation. The union is busy drafting proposals for the new airline envisioned by Gordhan‘s Leadership Compact.
Raphetha points out that criteria for re-employment into any new airline that might be created, is as yet unknown.
According to Derek Mans, Solidarity‘s head for the aviation industry, the union appreciates the extension granted as it will provide space to advise its members and for members to consider the current proposals on the table as well as avoiding ambiguity between what the BRPs propose and proposals raised during meetinigs with the DPE as part of the Leadership Compact.
The embattled national carrier has been in voluntary business rescue since December last year. The business rescue practitioners late last month said the of airline cannot survive beyond month end, and the choices left are either a forced liquidation or a winding down process.
The airline‘s troubles were further worsened by government‘s decision to reject a request for further financial support for the business rescue process, after a R5.5 billion in post commencement was fully drawn and utilised in March 2020.
The demise of SAA would mark an end of era for the 86-year old airline which had gone through years of financial troubles associated and high debt associated with poor management.
Asked for comment on their latest lettere to SAA employees, the BPRs responded that it is an internal letter, which must have been leaked.
A DPE spokesperson did not immediately respond to calls for comment on the BRPs‘ latest correspondence with employees.
UPDATE: Captain Grant Back, chairperson of the SAA Pilots‘ Association said unions and the DPE have embarked on a bold new initiative to save a part of this vital national asset. The minister and labour have been asking for an extension of the 1 May deadline already.
Back finds it “disingenuous and suspicious” that the deadline for signing the BRPs‘ proposed termination agreement is only given now, two days later, and not prior to the [1 May] deadline.
“It is apparent that the vast majority of labour has not signed this flawed agreement, which does nothing to secure retrenchment packages and would limit one‘s rights to participate in a new SAA, if, as per the BRPs‘ unnecessary restriction, funding is not secured from the shareholder before 30 June,” says Back.
“Why is this arbitrary deadline in place, especially since domestic flying is only expected to start from possibly as late as September or October of this year? Management and the BRPs are tempting employees to sign the collective severance agreement by offering up 2 weeks per year in payment if one signs the agreement, but that is only if the creditors agree and then only if enough funds are generated from the sale of a limited basket of assets in 12 to 24 months time.”