A WEEK of high drama for the South African Airways (SAA) ended in a stalemate as the creditors vote for the Business Rescue Plan (BRP) was adjourned to July 14th.
This is the day before government has to come up with funding guarantees of up to R26 billion on its own or in conjunction with private investors for a restructured SAA, or have the airline face liquidation.
The adjournment comes after the Department of Public Enterprise urged creditors to vote for the plan and offered workers severance packages.
The plan requires a 75% vote by creditors to be approved.
The department argues that business rescue is a more viable option than liquidation as the latter would leave creditors and workers worse off. DPE received backing from the rest of cabinet on Thursday evening.
This was also a week in which the North Gauteng High Court rejected a bid by SA Airlink to have the Business Rescue Process halted and have the airline liquidated instead.
Judge Leicester Adams struck the matter of the roll saying it is not urgent
In its severance package offer, the department said it was offering workers a week’s pay for every year of service, accumulated leave, and all standard pay outs as well as top up of the severance package.
The payment of severance packages is subject to the approval of the Business Rescue Plan.
Under liquidation, workers stood to receive a severance pay capped at R 32 000 irrespective of the years of service. The payment would occur after conclusion of the liquidation process which would take up to two years.
Trade Unions the National Union of Metalworkers of South Africa (NUMSA), the South African Cabin Crews Association and the Pilots Association of South Africa (ALPA-SA) successfully pushed for the postponement of the Busines Rescue and demanded more time and discussion to consider the severance package offer, which the say was emailed to on the eve of the creditors meeting.
The unions contend that the plan is “weak and had little chance of relaunching SAA successfully”.
The unions argue that the plan does not comply with the Companies Act or the Labour Relations Act and that unions were not sufficiently consulted.
“It is our view that the plan, as currently constructed, has little chance of successfully relaunching SAA, unfairly targets labour and has too many errors and poor assumptions in it for it to be passed,” the unions said.
The workers representative further state that “the purpose of the adjournment is to allow for all stakeholders to work together to improve on the plan and to amend it accordingly.”
The unions said it was not in favour of the business rescue process “because it is defective and lacks the kind of detail which would ensure the emergence of a sustainable airline.”
Among the unions objections seems to be the staff complement required for the new airline. The BRP envisages 1000 employees being required to launch the new airline, against the current staff of 47000. The unions point to the fact that 69% of creditors voted for the adjournment suggests that the plan would not have received sufficient backing.
On the voluntary severance packages, the unions have demanded further discussions with the department to arguing that they need to ensure that the packages “are in the best interest of their members and will not leave them worse off.”
(Compiled by Inside Politics staff)