On Thursday, the business rescue practitioners of loss-making SAA argued that the labour court has no jurisdiction to hear an application opposing the looming retrenchments at the state-owned airline.

Unions organising at the airline, the National Union of Metalworkers SA (Numsa) and SA Cabin Crew Association (Sacca), are opposed to the retrenchments.

In an affidavit, business rescue practitioners Siviwe Dongwana and Les Matuson argue that SAA is currently in business rescue and that, according to the Companies Act, no legal proceedings should proceed without their consent or without the leave of the court.

A business rescue process is aimed at rehabilitating a financially distressed company by restructuring its affairs including debt, among other things.

“The applicants have neither sought nor obtained the consent of either or both of the [business rescue practitioners] of SAA. The leave of the court has not been obtained,” they said.

Numsa and Sacca approached the courts after the two practitioners recently announced that the airline would cancel all domestic flights, except for a reduced service to Cape Town, as well as some international and regional flights, at the end of February in a bid to cut costs.

The decision has been criticised by the unions, while President Cyril Ramaphosa, Eastern Cape premier Oscar Mabuyane and his KwaZulu-Natal counterpart Sihle Zikalala have also expressed their dissatisfaction with the decision. The practitioners have insisted that the decision to cut flights was taken in the best interests of SAA.

In a meeting with employee representatives last week, the practitioners said retrenchments are now under consideration and the company cannot afford the mandatory 60-day consultation process prescribed by the Labour Relations Act (LRA). They are said to have asked for an expedited process, arguing that the the funds they have left could be exhausted by the end of March.

SAA recently received a R3.5bn loan from the Development Bank of Southern Africa (DBSA), which enabled it to continue flying while the practitioners prepare to restructure the airline into what is hoped will be a sustainable business.

Jumping the gun

The unions want the court to compel the practitioners to comply with section 189 of the LRA if there are to be retrenchments, which they argue is a foregone conclusion. They are against expediting the process.

They also want SAA not to go against an agreement reached during wage negotiations in 2019, in which the company would make use of the government training layoff scheme.

At the labour court on Thursday, advocate Tembeka Ngcukaitobi, representing Numsa and Sacca, accused SAA of effectively embarking on a retrenchment process without following the letter of the law.

Advocate Tembeka Ngcukaitobi. DAILY DISPATCH/ LULAMILE FENI
Advocate Tembeka Ngcukaitobi. DAILY DISPATCH/ LULAMILE FENI

He said the cancellation of SAA services was not a mere re-organisation — “It’s termination of employment. Retrenchments are contemplated, if not, why would [the practitioners] waste everyone’s time and say they want an accelerated process [in dealing with this matter].” 

“SAA is contemplating retrenchments and the reason it wants to do it quicker is because the [R3.5bn] bailout is running out. It’s clear SAA has embarked on a process of terminating employment contracts: everyone including the pilots are going to be jobless. What we are saying is that they must follow the LRA,” said Ngcukaitobi.

Advocate Andrew Redding, representing the business rescue practitioners, said the unions could not bring proceedings against a company in business rescue unless they consent. SAA was placed in business rescue in December in an effort to try to restructure the company that has received more than R20.5bn of fiscal support over the last three years.

Redding painted the unions as jumping the gun on the retrenchment process, saying there is no evidence anyone has had their appointment terminated. He described the move to cut flights as a management decision, saying it was made to save capital and was not a restructuring decision, as such.

SAA is in dire financial straits ... what is required effectively is that the practitioners be given opportunity to develop a plan. They say retrenchments are envisaged, not contemplated,” said Redding.

Judge Graham Moshoana said he will “possibly" deliver a judgment or order on Friday.