The department of public enterprises says it will not improve the voluntary severance offer made to pilots and has accused them of being “greedy”.
The SAA Pilots Association (Saapa) has put forward an alternative retrenchment plan in negotiations but it has also said that it will not oppose the voluntary retrenchment process in principle. Business rescue practitioners have said that acceptance of the rescue plan is a necessary precondition to the plan being endorsed.
The department's formula for the voluntary severance packages strongly advantages lower-paid workers by providing a range of “incentives” — including a R100,000 payment — which makes the offer an extremely generous one compared to statutory requirements. However, pilots — who earn substantially more than the rest of the workforce — will only receive the statutory minimum of one week's pay for each year of service.
The difference in treatment of employees has led to protracted disagreements between the Saapa and the department.
The department said that while Saapa had endorsed the packages being offered, it wanted benefits that would be more lucrative and financially rewarding for the pilots than any other class of SAA employee.
Earlier this week, SAA’s business rescue practitioners published an updated plan with few material changes other than an offer to place 1,000 employees on a training layoff scheme instead of retrenchment.
The change came about as a result of talks between the department of public enterprises and majority trade unions the National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca) earlier this week.
The change meant that all trade unions, including the pilots association, had accepted the terms of the voluntary severance package offered by the airline.
The business rescue plan has estimated the cost of the voluntary severance packages to be in the region of R2.2bn.
The department on Friday said Saapa had proposed, among other things, that SAA reduce the number of retrenched employees from 3,647 to 1,548, excluding the 664 on furlough, which are employees who are retrenched but can be called in as required.
The department said this meant the total cost of Saapa’s proposal would be R1.986bn against the budget of R2.2bn that has been proposed to fund the department’s proposal.
It said the association’s proposal sought to retain more employees, particularly more pilots.
“These 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.
“The department of public enterprise does not believe that the Saapa proposal is in the best interest of SAA, its employees, creditors and other stakeholders, and has informed Saapa that its proposal would exacerbate a prolonged economic recovery in a post-Covid-19 era,” the department said.
It said it had informed the union that their proposals could not be accepted nor would they accede to any further “unreasonable and greedy demands from sections of union leadership for additional benefits”.
The airline, which is not financially viable, has been in business rescue for six months. But the process has not been completed due to ongoing delays in finalising the business rescue plan.
The plan was going to be put to a vote in June, but a decision on it was postponed until July 14. If the plan is rejected and an alternative not proposed, SAA will be placed in provisional liquidation.
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