SAA, the state-owned airline that accumulated R26bn of losses over the past six years and was placed into business rescue in 2019, has told all its almost 5,000 employees that it will push ahead with a plan that could see it cut jobs as it fights for survival.
The business rescue practitioners, who were appointed by government to to manage the affairs of the company with a view to rehabilitation, said its financial position had deteriorated further with forward sales down significantly, a factor that was likely to be made worse by the outbreak of the coronavirus wreaking havoc in markets and restricting travel.
Their move, which may affect all of the airline's 4,708 employees, came about a month after unions failed in an urgent application to the Labour Court to prevent the business rescue practitioners from fast tracking retrenchments. The practitioners told employees in February that the company couldn't afford the mandatory 60-day consultation process prescribed by the Labour Relations Act .
A plan by Les Matuson and Siviwe Dongwana to cancel some local flights also faced opposition from government. Public enterprises minister Pravin Gordhan saying last week he was hopeful that the routes would be reinstated sooner rather than later. Deputy president David Mabuza said the move was temporary.
The state-owned airline, one of several state-owned enterprises that were brought to their knees by mismanagement and corruption during former president Jacob Zuma's time in office, entered business rescue in 2019 after several years of operational losses and government bailouts that have weakened SA's fiscal position to such an extent its on the verge of losing its last remaining investment-grade rating.
The practitioners told employees last month that retrenchments were under consideration and that the company could not afford the mandatory 60-day consultation process prescribed by the Labour Relations Act.
In their statement on Monday, Matuson and Dongwana, said things had got worse in recent months, leading to a decline a decline of R1.3bn in revenue while its costs remained flat.
Since late 2019, the airline had to endure delays in getting funding, the grounding of planes by the regulator, an eight-day strike, before being placed in business rescue, which in turn saw it lose insolvency cover.
"The changes required at SAA are therefore both structural and economic" and and were urgent if liquidation — where all employees would lose their jobs — was to be avoided, said the business rescue practitioners said.
They had been speaking with unions, most recently at the weekend.
“Our intention has always been to preserve as many jobs as possible through this process while still focusing on having a sustainable airline and platform for growth,” they said.
Significant changes to conditions of employment, including remuneration and benefits, appeared unavoidable and would be sought by agreement.
“Regrettably, this restructuring exercise, if implemented, may lead to positions being declared redundant across various job categories and in significant numbers. ” .
A number of alternative options had been considered but none would help SAA achieve all of its required operational efficiencies, the practitioners said.
They have elected to apply for the appointment of a facilitator from the Commission for Conciliation, Mediation and Arbitration (CCMA) to guide the consultation process. They would also consult with elected representatives from non-unionised managers and non-unionised non-management employees.
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