The Department of Public Enterprises announced Thursday morning that “final” voluntary severance packages will be offered to South African Airways (SAA) employees.
The packages consist of the minimum prescribed by law – namely one week’s compensation for each year worked – but will be calculated on the basis of salaries with a 5.9% increase that will be implemented retroactively. The increase was negotiated in November last year, but not introduced because the airline went into business rescue in December.
The department says in a statement there is no hope for SAA’s survival if it does not cut its staff costs.
Previously, it was reported that up to 3,700 of SAA’s approximately 4,700 employees must be retrenched in terms of the business rescue plan.
The packages will be offered to employees after a vote on the business rescue plan at 11am. 75% of SAA’s creditors must approve the business rescue plan.
Failure to approve the plan will result in a “protracted and expensive liquidation of the airline”, according to the department.
The department also warns that SAA cannot offer additional benefits to employees because creditors keep a “watchful eye” on the settlement with employees. This affects creditors’ potential losses.
If unions do not agree to the packages, the chances are good that creditors will reject the business rescue plan, the department warns.
“If the business rescue fails, the liquidation of SAA will mean that employees will receive a maximum of R32 000 each, if money is available. These payments will only be paid once the final liquidation and distribution account is approved, which can take up to 24 months. ”
The department also refers to the devastating impact of the Covid-19 airline crisis.
“As the shareholder on behalf of the government, the department believes the adoption of the business rescue plan will help creditors and employees become co-creators of a new airline and ensure a strong foundation is maintained for the growth of the local aviation industry.”