'New journey' ahead for restructured SAA, says Dept of Public Enterprises

South African Airways is set to be restructured into a new airline, according to the Department of Public Enterprises. 

This will not be the "old SAA" but "the beginning of a new "journey... which will be a proud flagship for South Africa," the department said in a statement on Friday evening. 

It said a leadership compact had been signed by "all parties" committing to a new approach at SAA that includes a "performance-based culture change for all leadership, management and employees as the transition to a new airline takes place," the DPE added. 

But the statement was issued just weeks after the department refused a R10 billion funding request from the embattled state-owned airline. 

It also came barely an hour after what had been the deadline for unions to respond to the business rescue practitioners' proposed termination of employment in terms of a Section 189 notice served in March. Earlier in the day, it emerged that unions the National Union of Metalworkers of South Africa and the SA Cabin Crew Association approached the Labour Court in a bid to have the retrenchment notices declared unlawful.

The deadline for unions to accept the BRPs' proposed termination of employment agreement had been 17:00 on Friday 1 May. The BRPs have not as yet indicated what the next step will be. 

The two unions, which together form a majority representation at the state-owned airline, filed an urgent application in the Labour Court in Johannesburg on Thursday, saying the S189 process was unlawful in terms of the Companies Act because the BRPs had not yet presented a business rescue plan to consider and vote on. Should the court find that the S189 process was lawful, the unions want it declared unfair instead. 

'Very demanding timelines'

They want the BRPs to withdraw the Section 189 notices, or for any deadlines for the retrenchment process to be extended until a business rescue process has been presented.

Now, the DPE has vowed to hold the business rescue process to stringent deadlines. In its statement, it said Minister of Public Enterprises Pravin Gordhan had established "very demanding timelines" for the development of the business rescue plan, as well as "parameters in order to determine what path SAA could follow". 

But it did not guarantee that no jobs would be affected. "The transition to the new airline may require sacrifices, pain and hardships for all concerned, particularly for those employees who may be displaced," it added.

Mashudu Raphetha, president of the National Transport Movement (NTM) said in reaction to the DPE statement that it is very disappointing that there is still no mention about the requested funding by the union for the retrenchments packages.

This is because there are many employees who want voluntary severance packages and early retirement and these alternatives require funding.

He said that it has been agreed with the BRPs in principle to delay the deadline for signing a yet to be adjusted proposed termination of employment agreement to 8 May and to also also allow employees to opt to sign such an updated document individually should the union decide not to accept it.

The DPE statement said challenges should be mitigated through a "range of measures not limited to, preferential reemployment, re-skilling and enterprise development opportunities." 

It also did not say what the source of the funding for the newly restructured airline might be. 

The South African Transport and Allied Workers Union (Satawu) said in a letter to its members that Gordan is "vigorously working to present deliverable measures to fund the processes of a new and restructured national airline and consequences of such exercise to the employees".

The union said the aim is for the new airline to harness domestic, regional and international opportunities, worker opportunities as strategic partners and a financial model to harness the opportunities to be presented by the new national airline business.

Despite SAA's crippling losses over the last decade, and airlines worldwide being impacted by the outbreak of the coronavirus, the department did, however, appear confident of the restructured airline's capacity for profitability long-term. "The creation of a new, dynamic airline, with the correct corporate structure, led by skilled, competent and experienced management and staffed at competitive and benchmarked rates will allow for the new SAA to compete in the post Covid-19 world," it said.

Finance Minister Tito Mboweni had recently hinted that a new airline might "rise from the ashes"

Tourism minister Mmamoloko Kubayi-Ngubane, for her part, said last week that the entire airline industry had been hammered hard by the coronavirus pandemic, and SAA should "go back and look again at what they can do with resources available". 

BRPs have previously said that after the airline's last funding application was rejected on 10 April, it would be impossible for SAA to to be run beyond the end of the month, and that it may have to be liquidated. Business rescue practitioners are legally bound to act in the best interest of all parties, including creditors.

The SAA BRPs earlier on Friday declined to comment on the court application. Captain Grant Back, chairperson of the SAA Pilots' Association, told Fin24 his union fully supported it.

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