Thando Maeko
3 minute read
10 Apr 2021
3:45 pm

SAA business rescue process expected to conclude ‘soon’

Thando Maeko

SAA's business rescue practitioners say Saapa demands two 13th cheques and salaries for December 2020 be paid out.

Running on empty. Picture: iStock

The South African Airways (SAA) business rescue process is set to conclude “soon”, according to its rescue practitioners Siviwe Dongwana and Les Matuson.

However, the airline has yet to come to an agreement with the SAA Pilots’ Association (Saapa). One issue of contention relates to whether severance payments to pilots who will be retrenched will be calculated in terms of the total cost of employment (TCE) prior to – or subsequent to – business rescue; the old TCE versus the new TCE.

Limited-time offer

In a business rescue update sent to members of Saapa by the rescue practitioners on Wednesday, SAA proposes that severance payments be calculated in terms of the old TCE (a considerably higher amount) – but that the difference between the old and the new TCE “be repaid through the receivership over a three-year period”.

Seen by the state-owned airline that has avoided liquidation thanks to taxpayer-funded bailouts as a concession – despite all existing employment contracts being based on the old TCE and the 36-month wait before the full amount due is paid – this the offer has been pegged at R129 million.

ALSO READ: SAA looking to replace locked-out pilots

A second aspect of the proposal – an ex-gratia payment “for the purposes of cancelling the Regulating Agreement” (which will have a negative effect on the conditions relating to a Saapa member’s employment), pegged at R85 million – would also be paid over three years.

The rescue practitioners said these two aspects of the proposal, representing a total of R214 million, “will no longer be available once the business rescue has ended”.

Undefined deadline

However, in their update, Dongwana and Matuson give no indication of when they will exit the company and thereby complete the rescue process.

They state only that “the exit from business rescue has been delayed by the signing of an agreement with the [airline’s] lenders” and that “this should be finalised soon”.

Saapa chair Grant Back says no agreement has been reached between the association and airline.

Dongwana and Matuson believe the parties are “relatively close to settling on the outstanding items”, but note their concern at “what appears to be an ever-moving target of demands” by Saapa.

They cite its request that its members be paid their 13th cheques and remuneration for December 2020 “immediately” and “without delay or conclusion of the settlement agreement”.

This relates to the as-yet unpaid 13th cheques for the financial years to the end of March 2019 (the “2019” cheque, payable in April 2020) and March 2020 (payable in April 2021). The rescue practitioners do not dispute that the two 13th cheque payments are due.

ALSO READ: SAA gets another R5 billion from government

They state however that: “SAA proposes that the 2020 13th cheque be paid pro rata until 18 December, 2020” – the date on which Saapa members were locked out of the airline.

In elaborating on Saapa’s “ever-moving” demands the practitioners state: “The latest being their demand that the two 13th cheques and salaries for 1 to 18 December 2020 be paid out immediately before any further engagements will be considered by Saapa with the BRPs regarding the settlement proposal.”

The rescue practitioners have agreed to make the above payments, but the funds will only “form part of the payments to be made once the settlement agreement is finalised”.

By Thando Maeko – This article first appeared on Moneyweb and was republished with permission.

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