The government of South Africa and its business rescue team have told trade unions that they now have until May 1st to finalize terms of South African Airways’ (SAA) employee severance deals. The state-owned airline offered severance packages to 4,700 SAA employees. This move came after the government expressed that it would not pump more funds into the firm.
The flag carrier of South Africa was already struggling with its finances before the global health crisis rocked the aviation industry. At the end of last year, it filed for bankruptcy protection. However, domestic and international flight restrictions forced the operator to suspend all of its commercial services.
Subsequently, last week, news broke that the company will lay off all of its staff at the end of April. It confirmed that staff members will receive one month’s salary for each year that they have worked with the firm. Additionally, employees will receive payment for annual leave that has not been used, along with further month’s pay instead of notice pay.
Reuters reports that South Africa’s public enterprises minister Pravin Gordhan signed a letter that was addressed to SAA’s unions. A deal was due to be finalized yesterday. However, the involved parties now have nearly another week to sort out underlying issues.
“We advise that the department agreed with Business Rescue Practitioners on a moratorium on the signing of the retrenchment (layoffs) agreements until Friday 1 May 2020,” the letter said, as reported by Reuters.
“As a result, the employees are not obliged to sign the collective agreement for the retrenchments for the period of the moratorium.”
There is still hope
Business rescue specialists Les Matuson and Siviwe Dongwana are working hard to keep the airline alive. Despite the dire financials, the team would not consider making an application for liquidation. Those working on the project face an overwhelming challenge. However, they are committing their efforts to saving the company.
SAA has not made a profit for the last nine years. Additionally, it has received 20 billion rand (US$1.1 billion) in bailouts in the past three years. There has been a mixed reaction in South Africa, with many members of the government and public feeling that the continued funding for the carrier is a waste of money. Meanwhile, supporters feel that the business plays a crucial part in the economy of the nation.
Altogether, the livelihoods of many are at stake with this severance deal. As such, there needs to be enough time to ensure that there is a fair conclusion. By extending the deadline until May 1st, unions will be able to communicate key points with SAA’s employees before finalizing terms.
What are your thoughts South African Airways’ prospects during this tough period? Will the situation get even worse for the airline? Let us know what you think in the comment section.