UPDATE: Labour Court dismisses SAA pilots' urgent application against their lockout

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  • The Labour Court in Johannesburg has dismissed an urgent application brought on behalf of the SAA Pilots' Association to have a "lockout" of its members declared unlawful or unprotected.
  • SAA wants pilots to forego the rights afforded to them in a decades-old regulating agreement.
  • Those impacted by the "lockout" are not allowed to render any services or get paid.

The Labour Court in Johannesburg on Tuesday afternoon dismissed an urgent application on behalf of the SAA Pilots' Association (SAAPA) to have the "lockout" of its members by the business rescue practitioners of South African Airways (SAA) declared unlawful or unprotected.

This was after the judgment was initially reserved, as Fin24 reported earlier.

SAAPA was found to have failed to establish a clear right to this relief it was seeking. The rescue practitioners opposed the urgent application.

A key sticking point for SAAPA was that the airline sought, in terms of the lockout notice, to forego the rights afforded to them in a decades-old regulating agreement, which includes recall, payment and selection criteria provisions. SAAPA members have been "locked out" since 18 December after negotiations on a new agreement failed and all internal dispute processes had been exhausted.

SAAPA has already offered (subject to members' ratification) what it says are significant concessions to SAA - up to 50% reduction in salaries and removal of the regulating agreement, but says it cannot agree to what it regards as the unlawful nature of the intended retrenchment of pilots coming down to being based on race.

Those impacted by the "lockout" are not allowed to render any services or get paid. The aim is to force them to accept the terms of a new employment agreement. The rescue practitioners have said in the past that there has been a recognition that all affected parties at SAA have to compromise in order for the business rescue process to succeed.

SAAPA argued in its application that it was many years of mismanagement which caused the demise of SAA and not because of the pilots' regulating agreement. SAA has in the past launched applications in the Labour Court and the High Court to try and set aside the regulating agreement. These applications were suspended when SAA was placed under business rescue.

In the view of the rescue practitioners, it was neither desirable nor sustainable that the pilots can carry their historical benefits into the future as embedded in the regulating agreement.

SAA has been in business rescue for more than a year now. Employees have not received salaries since May this year; and since the lockdown started at the end of March, only some repatriation and cargo flights have been undertaken. SAA has embarked on a retrenchment process in terms of the Labour Relations Act.

A so-called "evergreen" clause in SAAPA’s regulating agreement means that, notwithstanding any changes in ownership of SAA, it will remain in full operation and can only be terminated if a new agreement is concluded between the parties or it is terminated by agreement.

The rescue practitioners argued that the regulating agreement confers very extensive and lavish benefits on the pilots and provides no incentive for SAAPA to agree to have it terminated or replaced.

The rescue practitioners claim the evergreen clause would mean that the Regulating Agreement would remain in place irrespective of the dismissal of pilots based on operational requirements and would apply to any pilots employed in their stead who fell within the scope of the application.

According to the rescue practitioners, concluding new terms and conditions of employment of pilots is material to the very success of SAA's business rescue and continued commercial viability.

The Department of Public Enterprises (DPE), SAA's shareholder, has also said in the past that, in order for a restructured SAA to get off the ground, it is critical to reduce what it says is the too-high cost structure relating to pilots in terms of the regulating agreement. In the DPE's view, the agreement also contributed to the lack of transformation at SAA.

Funding to implement SAA's business rescue plan - R10.5 billion - was allocated by Finance Minister Tito Mboweni in his medium-term budget. It is supposed to cover voluntary severance and retrenchment packages (about R2 billion) for employees. The rescue plan only provides for about R2 billion in working capital to get SAA going again. 

That is why it is critical for government to find a suitable strategic equity partner for SAA to get it going again. It is foreseen that a new SAA will initially require only 88 pilots.

SAAPA has indicated that it is extremely disappointed with the outcome of the application and is reviewing it along with its legal counsel and is considering an appeal.

* This article was updated with the judgment.

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