Last chance saloon at SAA

RESCUE: UNIONS GET MORE TIME TO ACCEPT OFFER

Government makes final efforts to secure funding.

Public Enterprises Minister Pravin Gordhan has instructed the South African Airways (SAA) business rescue practitioners (BRPs) to extend the deadline for employees to accept retrenchment packages, while the state buys time to get funding or a buyer to enable the process of restructuring of the airline to resume.

The final deadline for employees to accept severance packages is next Monday, with BRPs Les Matuson and Siviwe Dongwana warning that the possibility of any further extensions is unlikely.

On Saturday the department of public enterprises’ acting director-general, Kgathatso Tlhakudi, said government and labour at SAA had signed a compact to allow a smooth transition to a “new SAA” through sacrifice and collaboration on the new business model. Tlhakudi said the “bigger prize” of the compact would be saving most of the jobs in the SAA group and the 60 000 jobs in the industry as a whole.

Tlhakudi explained that government is expecting that the dissolution of the old SAA and the emergence of a new airline will “unfold within the business rescue [window] despite challenges we’ve had to date in the production of the business rescue plan”.

The department has employed the services of an international aviation consulting firm to assist in developing the framework of the new airline and expects this to be concluded in the “next few weeks”, said Tlhakudi.

The department has already indicated that the new airline would be funded through several options, including strategic equity partners, funders and the sale of non-core assets. Tlhakudi said “private capital” would be used to realise the business as well as provide managerial expertise.

In order to give the government room to “properly explore” the funding options – either for immediate guaranteed funding that would allow the BRPs to “reconsider the perspective of a restructured SAA” or the sale of the business or assets to another party – Matuson and Dongwana extended the deadline again.

In a letter to unions and non-unionised employee representatives, the BRPs said they would offer labour an opportunity to accept the agreement by 10am on Friday. Should organised labour not accept the agreement the BRPs have reserved their right to extend the agreement to individual employees between Friday and Monday.

The revised severance package agreement effectively gives employees an additional but conditional week’s pay for every year of service.

This means the final offer is two weeks’ pay for every year spent at SAA, one month’s notice pay, reimbursement for outstanding leave and a pro-rated 13th cheque.

The BRPs have also added an “escape clause” which makes it clear that no employee will be prejudiced if they sign the agreement on or before Monday and government subsequently unlocks funding to reinstate SAA’s solvency by 30 June.

These employees would be re-employed and their old contracts reinstated. The retrenchment process that was previously under way to cut half the airline’s staff would also continue.

Private capital would be used to realise the business