SAA employees get another extension due to pending court ruling

South African Airways labour unions, rejecting a voluntary retrenchment process by the business rescue practitioners, have placed their faith in the plans of Minister of Public Enterprises, Pravin Gordhan, to either save or create a new state-owned airline.

At the labour court on Thursday, the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) challenged the Section 189 voluntary retrenchment process initiated by the practitioners in March, wanting it declared unlawful or, alternatively, unfair.

“The minister is not just a Jack and Jill, he is the shareholder of SAA,” Adv. Thembeka Ngcukaitobi SC, who is representing the unions, said. “The practitioners … cannot just be dismissive of [what he wants]. He is the state, it is clear the state has the money, regardless of earlier saying that it will not give any more money for the business rescue process.”

The Department of Public Enterprises last week said it had roped in an international aviation firm to assist with the formation of a new airline to replace SAA. Up to now, however, no announcement has been made of any further funding that has been obtained.

Airlines floundering

Airlines across the world have taken significant strain, with five international air transport and tourism bodies earlier this week appealing for support of Africa’s travel and tourism sector, which employs some 24.6 million people.

The various unions at SAA, of which Numsa and Sacca form a combined majority, had until 17:00 on Friday 8 May to accept the practitioners’ retrenchment deal. Thereafter it will be open until 11 May for employees to sign in their individual capacities.

By law the BRPs are obliged to act in the interest of all parties – employees, shareholders and creditors – and cannot be seen to benefit some over others.

Ngcukaitobi, however, argued that one must balance the interests of other stakeholders with that of employees and that any matters relating to labour should be seen in the wider context of existing labour laws.

He further argued that the relevant law applicable to the business rescue process, in effect, places a moratorium on retrenchments until a business rescue plan is provided. So far, no such plan has been tabled by the BRPs.

Adv. Andrew Redding SC, on behalf of SAA and the practitioners, referred to a request by the practitioners for further funding from government, which was rejected on 10 April. Their only option in this light was either a structured winding down, which they believe would offer a better return for all affected parties – or, if no such agreement can be reached, liquidation as last resort.

Redding argued that the practitioners are now operating in a world where the coronavirus (Covid-19) pandemic has created a state of disaster for airlines.

“We know in the background there is a discussion of a Compact and promises, but Minister Gordhan has not made a pledge [about funding],” said Redding.

Alternative transition

Gordhan said in an online media briefing to Parliament on Wednesday that the court case was very important, as it is challenging whether, without a business rescue plan presented, a Section 189 retrenchment process can be undertaken.

“We believe an alternative transition process is possible and we will put those proposals to the BRPs in the next 48 hours. The business rescue plan ultimately is to see how the business can get to be viable in future. The various classes of creditors must vote on it and banks in SA are the main creditors,” said Gordhan.

He questioned millions of rand paid by the BRPs for aviation consultants from the US. He said government does not plan to privatise SAA, yet a national airline is not necessarily 100{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} owned by the state. Therefore, government “will entertain strategic equity partners”.

Judge Andre van Niekerk reserved judgment in the Numsa and Sacca application.

UPDATE: On Thursday evening the practitioners announced that, in order to make the appropriate decisions depending on what the Labour Court ruling, they have extend the deadlines for unions and individual employees to sign the proposed voluntary termination of employment agreement yet again.

They expect the ruling in the next few days. According to a document seen by Fin24, the practitioners indicate that they will communicate further about the deadlines and the way forward in due course.

In reaction to the further extension of the deadline, the National Transport Movement (NTM) indicated that it will wait until the last day of the deadline before it signs or not.

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