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South African SAA staff not paid for May, desperate for answers

By Xolisa Phillip, in Johannesburg
Posted on Friday, 12 June 2020 17:37

Employees of the South African Airways (SAA) Express hold placards during a demonstration in Pretoria
Employees of the South African Airways (SAA) Express hold placards as they demonstrate against the struggling state-owned carrier, amid the spread of the coronavirus disease (COVID-19) outbreak, outside the Union Buildings in Pretoria, South Africa, June 5, 2020. REUTERS/Siphiwe Sibeko

Thousands of South African Airways (SAA) workers will find out on Monday what shape a re-imagined version of the airline will take, when its business rescue practitioners (BRPs) are to publish a long-awaited rescue plan.

The majority of the national carrier’s estimated 4,708 employees – pilots, support staff and cabin crew – have not been paid for May, barring those who have been operating repatriation and cargo flights in and out of the country, revealed BRP spokesperson Louise Brugman.

Most staff are on unpaid absence.

Zazi Nsibanyoni-Mugambi, president of the South African Cabin Crew Association (Sacca), one of the major unions at the flagship carrier, confirmed late on Friday that workers have not been paid for May.

“And not even the benefits have been paid – like, medical aid subsidies, Unemployment Insurance Fund contributions, pensions and all of those things. That’s also been stopped,” Nsibanyoni-Mugambi told The Africa Report.

Consultation riddle

A draft of the rescue plan was leaked to the media and a final version detailing how to restructure the airline is due for publication on Monday.

However, Nsibanyoni-Mugambi said unions are awaiting feedback from the department of public enterprises and the BRPs about labour’s inputs to the plan, making this weekend crucial as to whether a final plan will indeed be published on Monday.

READ MORE Amidst coronavirus crisis, retrenchment consultations are underway at SAA

If the BRPs make Monday’s deadline, “the final plan will go up on the [SAA] website – it’s a public document. It has to be tabled. There are 10 days to put it to the creditors,” Brugman told The Africa Report this week.

“In that plan, the BRPs will announce a date when they will convene a virtual meeting with the creditors. That is when they will vote for or against the plan,” according to Brugman.

Brugman says the BRPs have consulted the department of public enterprises, creditors, funders, employees, unions and relevant stakeholders affected by the business.

However, the department, Sacca and the National Union of Metalworkers of South Africa have conducted consultations through a leadership compact forum. Furthermore, the department is taking counsel from Seabury Aviation Consulting.

“We need answers from the DPE [department of public enterprises] and we need the BRPs to consult us before they issue the plan. This weekend is important for how we move forward,” said Nsibanyoni-Mugambi.

“We asked for an extension in order to consult with the BRPs. But we still have to consult. The plan is supposed to be issued on Monday. So we are a bit worried,” Nsibanyoni-Mugambi said.

Where will the money come from?

The department is the shareholder representative for the government. It is, in turn, overseen by Pravin Gordhan, whose ministry exercises oversight on state-owned entities.

The biggest question confronting the rescue plan, which might determine whether SAA lands safely or flies into disaster is: where the money to recapitalise and restructure the airline will come from.

South Africa’s pre-existing economic woes have been exacerbated by the global outbreak of COVID-19. The country instituted a national lockdown that has sent some industries into distress because of restrictions on economic activity.

READ MORE Coronavirus: South Africa to rev economy by easing lockdown

The outcome is that the country’s fiscal matrix have deteriorated substantially, with the national deficit projected at double digits while the debt-to-GDP ratio is expected to breach 70%. Furthermore, tax revenues have declined significantly.

The government has approached the International Monetary Fund (IMF) and other multilateral institutions cap in hand seeking financial relief.

Finance minister Tito Mboweni, who is scheduled to deliver a supplementary budget on 24 June 2020, implored his colleagues in Parliament during a virtual session late on Friday that the government needed to be brave and implement structural reforms.

Through his portfolio Mboweni holds the government’s purse strings, while Gordhan’s ministry places him at the centre of the SAA rescue process.

What complicates matters is that President Cyril Ramaphosa told editors two weeks ago he was “excited” about the future of SAA, while his governing African National Congress insists a state-owned airline is a national imperative.

What is clear, though, is that the nearly 5,000 SAA employees are in desperate need of a definitive answer because their livelihoods are at stake.

The Africa Report sent written questions earlier this week to the department of public enterprises, it is yet to give responses.

RECENT TIMELINE OF SAA:

  • December 2019: SAA goes into business rescue, practitioners Les Matuson and Siviwe Dongwana are appointed to oversee process
  • April 2020: BRPs propose winding down airline after government closes funding tap
  • April 2020: BRPs start section 189 consultations to retrench SAA workers
  • May 2020: Unions institute court action to challenge procedural fairness of BRPs’ section 189
  • May 2020: Court orders halt to section 189 retrenchments
  • May 2020: BRPs challenge court decision
  • June 2020: Appeal case set down for hearing
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