The contracts of employees of SA Express have been suspended in terms of the Insolvency Act, they were informed in an internal letter from the airline’s provisional liquidator Aviwe Ndyamara of the Tshwane Trust Company.
In March, SA Express, like other airlines, had to stop operations due to travel bans imposed for the national coronavirus (Covid-19) lockdown in SA.
The state-owned regional airline was placed in provisional liquidation on 29 April 2020 after its joint business rescue practitioners filed an urgent court application in this regard in the South Gauteng High Court.
This followed after a failed business rescue attempt, brought by a service provider in March. The state has provided more than R1.2 billion in urgent financial support to SA Express for the 2019/20 financial year, including R300 million released last October.
Before the airline was placed under business rescue, government mandated the board and management to investigate and terminate a number of irregular contracts as a way to save money and root out corruption, according to the department.
The business rescue practitioners and the Department of Public Enterprises could, however, not agree on a business rescue plan and funding. The practitioners claimed government deliberately withheld financial support to the tune of R350 million. The DPE, on the other hand, felt the proposed business rescue plan did not set out a credible business case to allow further funding.
Provisional liquidation means affected parties have an opportunity to contest the provisional liquidation on 9 June by trying to show why the airline should not go into final liquidation. If SA Express goes into final liquidation, all its assets would have to be sold and outstanding debts collected so that affected parties can be paid in order of preference in terms of the act.
Because of the suspension of their contracts, employees are not required to work and will, accordingly, also not be entitled to remuneration. In addition, no benefits will accrue in terms of the Basic Conditions of Employment Act.
Creditors were also informed by the provisional liquidators that they and other affected parties will get a detailed report on the way forward in due course.
Should it not be possible to sell the airline and transfer the current employees’ contracts in terms of the Labour Relations Act, within 21 days after a final liquidator has been appointed, the current suspended employment contracts may be terminated.
Employees will then be entitled to preferent claims in terms of the Insolvency Act. The act provides them a preferent claim up to R12 000 for salaries and wages; R4 000 for leave pay and R12 000 for retrenchment pay.
Certain employees may be re-appointed on temporary contracts to assist the liquidator in winding up the airline and preserving the business while negotiations with potential purchasers take place.
All employment contracts not already terminated will automatically end 45 days after the appointment of a final liquidator.
For Mashudu Raphetha, president of the National Transport Movement (NTM), what is happening at SA Express is very disheartening, especially after the union NTM intervened to save jobs during a restructuring process at the airline last year.
“The liquidation should have been avoided. Our last hope is a consolidation of SAA and SA Express,” he said.
Unions the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) voiced their unhappiness in the past, saying employees of SA Express had been made to suffer due to the way the airline had been managed.