SAA needs R2.2bn to pay for voluntary severance packages

An announcement about the source of funding for the SAA business rescue plan can be expected “soon”, according to people involved in the discussions.

In July, the treasury committed to find funding for the state airline’s business rescue plan.

Officials from the department of public enterprises and the SAA business rescue practitioners, Les Matuson and Siviwe Dongwana, held discussions on the matter this week.

The rescue practitioners’ spokesperson, Louise Brugman, said: “The shareholder is exploring a number of options for the sourcing of funds, of which some could be SEP [Strategic Equity Partner] funding.”

Employees were given until August 31 to accept or to decline the retrenchment package offers.


Brugman said: “Each employee needs to come into the office to sign for their VSP [voluntary severance package] before the approval process is completed.”

Of the 5 000 SAA employees, more than 3 000 have applied for the packages so far. One of the three conditions for the payment of the package, which is laid out in the termination contracts, is the “receipt of funding from the shareholder”.

The contracts, seen by the Mail & Guardian, do not say when the funding will come through.

The business rescue plan, which was approved by the airline’s creditors in July, projects that at least R10.1-billion is required. About R2.2-billion will be set aside for the payment of voluntary severance packages.

The rescue plan foresees only 1 000 people will remain employed by SAA.

Severance payments will be made once a settlement has been reached with unions or 30 days after the finalisation of the section 189 process.

Solidarity’s representative, Derek Mans, says that since the section 189 process lapsed on Wednesday, the government has the next four weeks to make the payments. 

The union’s members have signed the retrenchment agreements but Mans says the terms “are less favourable than the terms stipulated within the business rescue plan”.

He said Solidarity is consulting their legal team and senior counsel to “see if we cannot take action against SAA to enforce the plan”.

The National Unions of Metalworkers (Numsa), the South African Cabin Crew Association (Sacca), and the National Transport Movement have also confirmed that their members have signed the agreements.

Numsa and Sacca had previously advised their members not to sign the agreements until funding for the rescue plan had been secured. Numsa’s Phakamile Hlubi Majola said that by signing the contracts employees would be terminating their employment. Despite this, their members had signed.

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Thando Maeko
Thando Maeko is an Adamela Trust business reporter at the Mail & Guardian

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