News24 Wire
Wire Service
2 minute read
13 Jul 2020
3:31 pm

SAA unions, creditors should become ‘co-creators of a new national airline’

News24 Wire

Some seven months after it entered business rescue, a vote on the airline's future is at long last expected take place on Tuesday.

Ahead of a key vote on the future of embattled national carrier SAA, Pravin Gordhan’s department of public enterprises (DPE) has called on unions and creditors to become the “co-creators of a new national airline”.

Some seven months after it entered business rescue, a vote on the airline’s future is at long last expected take place on Tuesday.

Stakeholders will vote to accept or reject the amended business rescue plan drawn by up business rescue practitioners Siviwe Dongwana and Les Matuson, which includes the retention of only 1 000 jobs, as well as offers of voluntary severance packages to staff to reduce the airline’s wage bill.

A vote in favour of the plan by 75% of the voting interests is required to carry the vote.

ALSO READ: Do not back SAA rescue plan – DA

“Should creditors vote not to support the business rescue plan, SAA would face liquidation,” said the DPE, which would mean far lower severance package payouts to staff.

Meanwhile, requests made by pilots to retain more staff at SAA were not in the best interest of the airline and won’t be considered, the department of public enterprises said on Friday.

According to the department, the 600 pilots who make up 45% of the airline’s wage bill have, through their association, proposed that SAA retain a “much larger number of employees – in particular more pilots” in the new airline that will be created from the “old” SAA if creditors next week vote to accept its business rescue plan.

ALSO READ: Putting SAA before empty stomachs is ‘anti-human rights’ – judge

The initial plan was that 1 000 SAA employees would be retained, and around 2 700 retrenched. However, according to the DPE, the South African Airways Pilots Association has proposed that only 1 548 staff members be retrenched, and 3 099 retained.

The higher number of staff would be offset, somewhat, by increased cuts in salaries under Saapa’s proposal.

“[The proposals] purport to be affordable now, when in fact they would cause the base costs of starting a new airline to be substantially higher, unaffordable and unsustainable,” said the DPE in a statement on Friday.

According to the DPE, the pilots are also seeking improved voluntary severance packages to “incentivise senior pilots”, and opportunities for younger and particularly formerly disadvantaged pilots to advance their careers.

About R2.2 billion has been put aside to fund severance packages for SAA staff. The DPE stated that the pilots’ proposal could take up R1.986 billion of the budget.

“The DPE has informed SAAPA that their proposals cannot be accepted nor will they accede to any further unreasonable and greedy demands from sections of union leadership for additional benefits.

“This goes against the stated goal of ensuring a new, restructured, viable and competitive airline that must emerge from a business rescue process for SAA,” said a statement.

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