SAA rescue plan improves offer to employees
• Generous voluntary severance package has been accepted by all trade unions, including SAA Pilots Association
SAA’s business rescue practitioners published an updated plan on Wednesday with few material changes other than an offer to place 1,000 employees on a training layoff scheme instead of retrenchment. The change came about as a result of talks between the department of public enterprises and majority trade unions the National Union of Metalworkers of SA and the SA Cabin Crew Association. The change means that all trade unions, including the SAA Pilots Association, have accepted the terms of the voluntary severance package offered by the airline.
SAA’s business rescue practitioners published an updated plan on Wednesday with few material changes other than an offer to place 1,000 employees on a training layoff scheme instead of retrenchment.
The change came about as a result of talks between the department of public enterprises and majority trade unions the National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca) earlier this week.
The change means that all trade unions, including the SAA Pilots Association, have accepted the terms of the voluntary severance package offered by the airline.
While unions do not have a vote on the business plan in the creditors’ meeting that takes place next week, the plan has acceptance by labour as one of its necessary conditions.
Numsa and Sacca had previously said they did not accept the business plan or the voluntary severance package.
But talks earlier this week led to an additional concession by the department of public enterprises, which includes an undertaking that an additional 1,000 employees be retained through a temporary layoff scheme by the department of employment & labour.
This is twice as many as was provided for by the business rescue plan, which stated that only 1,000 jobs would be retained. Numsa and Sacca have now said that workers are “invited to apply for the voluntary severance package”, though as unions they have not given their endorsement.
Sacca president Zazi Sibanyoni-Mugambi said on Tuesday this was to enable those who wanted to leave to do so. But the union’s priority remained to protect as many jobs as possible.
In terms of the offer, which is more generous than statutorily required, no-one will receive less than R200,000. In addition to one week’s pay for each year of service, employees will also receive “incentive payments” and back pay. On average a pilot will receive a package of R2m and a cabin crew employee about R350,000.
The business rescue plan has estimated the cost in the region of R2.2bn.
The additional 1,000 employees would remain employed by SAA for 12 months, which would pay their benefits but 75% of their salary would be paid by the department of employment & labour.
The agreements reached between employees and the department have no legal standing but have previously been incorporated by the business rescue practitioners into the business rescue plan.
The practitioners were expected to republish the business rescue plan after the creditors meeting held two weeks ago voted to delay deliberation on the plan. The next creditors meeting is scheduled for July 14.
The plan depends on a number of preconditions being met. Apart from support from the trade unions, it depends on the Treasury agreeing to fund the restart of SAA, which it is anticipated will cost R2.8bn.
Additional costs that need to be settled, including retrenchment packages for staff, amounting to another R7.2bn are also to be funded by the government, according to the plan. But it is still unclear whether these funds will materialise.
IN TERMS OF THE OFFER, WHICH IS MORE GENEROUS THAN STATUTORILY REQUIRED, NO-ONE WILL RECEIVE LESS THAN R200,000
At last week’s supplementary budget, no new funding for SAA was announced and Treasury officials said they did not anticipate allocating it any further funding.
The government has, however, committed to repaying all lenders an amount of about R16.4bn over the next three years from the Treasury funds.
The updated business plan states that if an appropriation for repayment is not in place by August 31, lenders will have the right to “accelerate and call under government guarantees”.