A severance settlement proposal from business-rescue practitioners at embattled airline SAA will all but shut down the business, but labour representatives at the airline are of the view it can still be saved if drastic measures are taken.
At least one union thinks that insourcing all services at SAA — including cleaning aircraft, baggage handling and even downgrading of overnight accommodation for pilots and cabin crew — would go a long way towards reducing costs that have seen the airline crippled.
Part of the counterplan also includes moving SAA staff who work on SAA domestic routes to SAA subsidiary Mango in a bid to save jobs. Mango is set to take over SAA’s domestic routes.
In a settlement agreement sent to eight different groups representing workers at Airways Park on Friday afternoon, SAA business-rescue practitioners Les Matuson and Siviwe Dongwana say the government’s decision to reject a R10-billion bailout request last Friday means it is unlikely that SAA will be rescued.
Their spokesperson, Louise Brugman, said they would not comment on whether the agreement was signed; the next move would be to apply to the courts for business rescue to be rescinded and replaced with voluntary liquidation of the airline.
President Cyril Ramaphosa and his Cabinet have mandated Public Enterprises Minister Pravin Gordhan to present a report on SAA, and it is expected that the report will include several options regarding a way forward.
Gordhan and Finance Minister Tito Mboweni have been at odds over whether the government should continue to fund SAA’s restructuring — which is being costed at R7.6-billion — and also help the airline deal with the effects of the Covid-19 pandemic, which has grounded the airline industry.
Mboweni has made no bones about the fact that SAA, which has received a total of R31.7-billion in cash bailouts and government guarantees in the last five years and is set to receive R16.5-billion until 2023, cannot continue to weigh so heavily on the government.
As a result of this a settlement agreement, all of SAA’s 4 708 workers will receive a severance package comprising one month’s salary, a week’s pay for every year served at the airline and a payout for any unused annual leave. Employees who had signed up for 13th cheque deductions in their packages will also be paid out for these.
But the entire proposal, in terms of the settlement, rests on SAA’s ability to sell its meagre assets which include property, aircraft spares and trade debts, which would take between six to 12 months to collect.
“In the event that the condition precedent set out in clause 5.3 above is met, the company will make payment of the severance packages to employees on a monthly basis, over a period of six months, once the sale of assets have been concluded,” the agreement read. It also said individual workers now have until April 24 to accept the agreement in writing.
On Friday the Mail & Guardian reported that it had learnt that Matuson and Dongwana were in a race to secure severance packages for employees before SAA is forced into liquidation, as this would place priority on some of the airline’s creditors over the workers.
At least one union, the National Transport Movement (NTM), has indicated that it will not only oppose the offer as it is, but it will table yet another savings plan in the hope that it will buy time for the embattled airline or protect more workers.
This plan, said NTM president Mashudu Raphetha, will include measures such as insourcing all services, including baggage handling, grooming of the aircraft, toilet and water services, as well as SAA operating its own bus service from the aircraft to the terminal. These initiatives alone will save the airline just less than R10-million a month, Raphetha said.
Raphetha said more savings could be achieved if the airline deployed its own staff to regional and international outstations and the airline’s VVIP service, and booked flight deck and cabin crew in three-star accommodation for rests on night stopover.
“We are not convinced that all avenues have been covered, and we will be making this point to the BRPs [business-rescue practitioners] as early [as] Monday,” he said.