Four unions ready to sign SAA severance packages

2 July 2020

Four unions and staff representatives have approached the Department of Public Enterprises (DPE) to indicate that they are ready to sign the voluntary severance packages (VSPs) offered as part of South African Airways (SAA) business rescue and restructuring process – a precursor to the formation a viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services.

The National Transport Movement (NTM), the South African Transport and Allied Workers Union (SATAWU), the Aviation Union of Southern Africa (AUSA), Solidarity, and representatives of the SAA non-unionised managers and ground staff, met DPE representatives on Wednesday and made the commitment that they would like to sign the VSPs, which can be offered to employees immediately after the creditors vote on a business rescue plan on Tuesday 14 July 2020.

The unions and staff representatives said they supported the VSPs which include one week calculated per year of completed service, one-month notice pay, accumulated leave paid out, a 13th Cheque and a top-up of severance packages calculated on a back-dated 5.9% wage increase which was agreed to in November last year.

Following requests by the four unions and staff representatives to accept the VSPs, DPE will inform the Business Rescue Practitioners (BRPs) of the particular employees’ readiness to accept the packages.

The BRPs are expected to table a revised business plan on Tuesday 7 July 2020, which will be voted on by creditors and the airline’s stakeholders such as lessors and employee representatives on 14 July 2020.

A vote in favour of the plan, by 75% of the voting interests would be required to carry the vote. A vote against the plan would result in protracted and costly liquidation of the airline, something representatives of NTM, SATAWU, AUSA, Solidarity, and SAA staff, said would be a long and painful ordeal.

At this stage, the National Union of Metalworkers of South Africa (NUMSA), the SA Cabin Crew Association (SACCA) and the SAA Pilot’s Association (SAAPA), have objected to the final VSPs available to SAA employees.

The DPE said it is not a position to accede to any further unreasonable demands from sections of union leadership for additional and greedy demands, adding it is important to recognise that the creditors would be keeping a watchful eye on how much money was being spent by SAA, as opposed to what they were trying to recover in the business rescue process.

At the previous creditors meeting on 25 June 2020 to vote on the business rescue plan, these unions also supported a motion by SA Airlink to postpone the creditors vote and have effectively aligned themselves with a competitor who stands to benefit substantially should SAA be liquidated.

The postponement of the creditors vote puts the business rescue plan, severance benefits in the VSPs for employees and the retention of 1 000 jobs at risk. The postponement also creates uncertainty for creditors, SAA employees and potential investors.

Should the business rescue fail, the liquidation of SAA will mean that employees would receive up to a maximum amount of R32 000 per employee if there are funds available.

These payments will only be disbursed once the final liquidation and distribution account has been approved, which can take up to 24 months.

As the shareholder on behalf of government, the DPE believes the approval of the business rescue plan would help creditors and employees become co-creators of a new airline and to ensure a strong base is maintained for the growth of the local aviation industry.

The DPE said employees who take up the VSPs would participate in a Social Plan and be entitled to re-apply for positions in the new restructured company as it grows.

The Social Plan is aimed at empowering displaced employees with new skills which will give them the best opportunity of regaining employment in the aviation industry as it recovers, as well as opportunities identified in other sectors.

Issued by Sam Mkokeli on behalf of Department of Public Enterprise, 2 July 2020