SAA staff face unemployment with possibility of no severance pay

Image: FILE

The business rescue practitioners of ailing state-owned airline SAA have laid out the process for full termination of all employees at the end of the month, but only if funds exist at the end of the winding down of the company.

SAA is insolvent and its liabilities completely outweigh its assets. This means that the airline’s 10,000 employees actually stand to get no severance pay unless the government can ensure there is money available.

The business rescue practitioners of another state-owned airline SA Express have already applied to the courts for the liquidation of the company.  

In a proposal sent to unions and seen by Business Day, the SAA practitioners, Les Matuson and Siviwe Dongwana, said in order for SAA to pay severance packages the company was required to sell and dispose of its assets.

They listed the assets such as property, which may be realised in six to 12 months; rotables, which are aircraft parts; and trade debts, which may be collected between six to 12 months, depending on the financial position of the debtors.

The practitioners said the severance packages were conditional upon these assets being “realised at the value capable to cover the severance packages”. 

If the condition set out is met, SAA will pay the severance packages to employees on a monthly basis over a period of six months, once the sale of assets had been concluded.

Earlier this week, the government told the SAA practitioners that it was unable to provide the airline with further funding.

It also refused its request to raise funding for the airline in foreign capital markets. SAA is unable to raise further funding in domestic markets and owes significant debt to a consortium of local banks.

Public enterprise minister Pravin Gordhan is expected to give a presentation to cabinet on SAA at a meeting on Monday.

At the beginning of March, the business rescue practitioners issued a notice to unions and non-unionised employees inviting them to consult on possible job losses at SAA, as the result of the company’s operational requirements. However, in light of government’s decision not to provide further funding the practitioners are proposing the termination of all staff.

In the proposal to unions, the practitioners are asking staff to agree to the termination of their employment, due to SAA’s operational requirements, on April 30.


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