Solidarity shoots down SAA business rescue plan
Union says the radical changes needed to create a successful airline are not on the table
Another trade union represented at SAA has come out against the recent business rescue plan, arguing that if implemented the airline will once again be destined for liquidation or business rescue in the near future while wasting taxpayers’ money.
Union Solidarity’s rejection of the plan adds to that of majority unions National Union of Metalworkers of SA (Numsa), the SA Cabin Crew Association (Sacca) and the SAA Pilots Association (Saapa), which have already come out against it.
The department of public enterprises on Thursday cautioned SAA employees, unions and creditors that liquidation would lead to financial hardship for employees and substantial undervaluation of assets.
“All SAA stakeholders who are in the position to either support or reject a business rescue plan for SAA should realise that business rescue provides a better outcome than liquidation and should be supported for their collective interests,” it said.
The department said four unions and staff representatives had approached it to indicate that they were ready to sign the voluntary severance packages (VSPs) offered as part of SAA’s business rescue and restructuring process. The four include Solidarity, which is one of the unions that rejects the business rescue plan. The other unions are the National Transport Movement (NTM), SA Transport and Allied Workers Union (Satawu), and the Aviation Union of Southern Africa.
Solidarity said that despite not supporting the rescue plan it is prepared to accept the social plan, which includes the VSPs. Numsa, Sacca and Saapa have rejected the VSP offer.
The department said the business rescue practitioners were expected to table a revised business plan on July 7, which will be voted on by creditors on July 14.
Solidarity, in a document to the creditors’ committee, said the plan was in essence just a continuation of the SAA operation before business rescue, but minus 3,700 employees.
“The radical changes that were necessary to enable a successful business rescue have not been proposed or implemented — and, ultimately, employees are paying the price for decades of mismanagement, corruption and incompetence,” Solidarity said.
It said a business rescue plan that does not recognise the severe financial situation SAA finds itself in, or the huge effect of the pandemic on the chances of a rescue being successful, will be unimplementable.
Numsa, Sacca and the pilots’ association, alongside several creditors, sought to postpone a decision on it until July 14, at a crucial meeting of creditors held last week.
Since then, the department of public enterprises has withdrawn from the leadership consultative forum (LCF) it had established with organised labour to develop a new and restructured SAA, saying the unions’ actions had set the airline on the path to liquidation.
Public enterprises minister Pravin Gordhan has tried to persuade all parties to support the plan.
The airline, which is not financially viable, has been in business rescue for six months. But the process has not been completed due to delays in finalising the business rescue plan, which was to have been put to a vote last week.
If the plan is rejected and an alternative not proposed SAA will be placed in provisional liquidation.
The department said a vote in favour of the plan by 75% of the voting interests is needed. A vote against it would result in a protracted and costly liquidation of the airline.
It said liquidation of SAA would mean employees would receive a maximum of R32,000 per staff member, regardless of years in service, provided that there were funds available. Employees would receive payment only once the final liquidation and distribution account had been approved, which could take up to 24 months.
The department said it was convinced that the R2.2bn budget for voluntary severance packages for employees was the best available option at a time when the government is facing huge financial demands and fiscal constraints.
It said the severance packages, which can be offered to employees immediately after a creditors’ vote endorses the business rescue plan, meets the requirements of the Basic Conditions of Employment Act and the Labour Relations Act, including one week calculated per year of completed service, one month of notice pay, accumulated leave paid out, a 13th cheque and a top-up of severance packages.
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