The receipt of the first R1,5bn of the R10,5bn allocated to SAA should, theoretically, allow the business rescue practitioners and the Department of Public Enterprises to start moving forward with the formulation of a new SAA. However, disputes between the DPE, the BRPs and unions on how the funding must be spent continue to hold back implementation of the business rescue plan.
Conflict over allocation
According to the Companies Act, the first R1,5bn must be allocated in a particular order, first by paying the business rescue costs, followed by the pre-commencement secured creditors and then payment to employees for their employment during business rescue. Secured post-commencement creditors are next in line followed by unsecured post-commencement creditors and then remuneration, reimbursement and expenses relating to employment prior to business rescue must be paid. However, the BRPs say they have been unable to disburse the R1,5bn, telling Travel News that the conditions that were stipulated by the DPE for how the funds should be spent are in contravention of both the Labour Relations Act and Chapter Six of the Companies Act.
“We are unable to utilise the funds until the conditions have been amended by the DPE,” said spokesperson for the BRPs, Louise Brugman.
Unions outraged
Outraged that their members have still not been paid due to this delay, Numsa and the SA Cabin Crew Association picketed SAA’s offices to demand payment of their salaries. SAA workers have not received their full salaries for the last eight months and were asked by the DPE to forego five months’ salaries during this period and accept a settlement including three months’ pay plus a bonus instead.
The DPE responded to the unions’ actions and released a statement urging SAA’s labour unions to negotiate in good faith to not only save the airline and the jobs at SAA, but also to draw the matter to a close, allowing SAA employees to receive their unpaid salaries in time for the festive season. The department reiterated that it felt that the settlement was a fair and equitable offering and said full settlement of outstanding salaries could not be acceded to.
Numsa has rejected this offer calling it “nothing less than broad, daylight robbery of what belongs to workers” and that the budget for the business rescue process included provision for the full payment of the salaries of workers. However, the other unions, Solidarity, Ausa and NTM announced on Friday that the DPE had accepted their proposal, which requires three months’ salaries to be paid out. However, this does not serve as a final settlement, and outstanding payments are deferred until the business rescue process has been finalised, says Solidarity, adding that the DPE will now pursue the matter with the BRPs.
What’s next?
Once a compromise has been finalised with the unions, the DPE lists the following steps that will be taken toward the formation of a new airline:
- Implementation of an interim ceo and cfo.
- Implementation of a Social Plan – this will be a training layoff scheme facilitated by the Transport Education Training Authority in partnership with the Department of Labour.
- Selecting a suitable strategic equity partner (SEP) – Minister of Public Enterprises, Pravin Gordhan, has been reported saying that negotiations are at an advanced stage and that the government has received 31 expressions of interest. Rumoured to be included on this list are Toronto-based investment firm, Fairfax Holdings, and Ethiopian Airlines.
- Settle the airline’s legacy debt.