Unions threaten legal action to have SAA business rescue practitioners removed

The National Union of Metalworkers of South Africa and the SA Cabin Crew Association are considering taking legal action against the business rescue practitioners of South African Airways, they said in a joint statement late on Friday afternoon.

The two unions, which together form a majority of union representation at the embattled state-owned airline, say they are eyeing a court application to have the BRPs removed.

Captain Grant Back, chairperson of the SAA Pilots' Association (SAAPA), said on Friday evening that they too believe the BRPs have not fulfilled their obligation and will also consider court action to have the the BRPs removed.

"We look forward to work with the Department of Public Enterprises (DPE) and the rest of labour in finding a workable solution to revive SAA and keep it as a national asset, which is necessary to kickstart our economy when we come out of the Covid-19 period," said Back.

The National Transport Movement (NTM) has already rejected the current proposal of the BRPs, "because it suggests the payment of severance packages are subject to the sale of certain assets and approval by creditors".

The permutations are leading to the future of the airline narrowing to two options which are liquidation versus restructuring," NTM president Mashudu Raphetha
 said on Friday evening.

"It seems the balance of forces are leaning towards the possibility of a liquidation, which may give rise to a new airline."

The South African Federation of Trade Unions (Saftu) also indicated earlier on Friday that it "rejects with contempt" the BRPs' proposal. It regards the proposal as an "attempt to blackmail workers".

Saftu claims the aim is "to collapse SAA in order to open the way for its privatisation".

A week ago the DPE rejected a request for further funding of about R10 billion from the BRPs in order to complete the business rescue process.

The BRPs had also earlier started a section 189 process with employees on restructuring the company. About a week ago the BRPs offered all SAA employees (excluding Mango and SAA Technical staff, subsidiaries which are not in business rescue) severance packages at the end of April to all staff.

SAAPA is of the view that the entire section 189 process has been just "a box-ticking excercise from the beginning". SAAPA claims labour has not been consulted to their satisfaction nor had informnation requested been provided, such as the business plans the BRPs referred to along the way.

"How do you have a section 189 process without a plan?" asks Back.

Employees have been given until next week to accept the agreement, which has since been adjusted.

Up to April, all employees have received their full salaries.

'Defend the airline'

"We are calling on government, and in particular the Department of Public Enterprises in the interest of saving SAA, to join our application to defend the airline, and work with us in developing a turnaround plan that will secure the future of the airline and save jobs," Numsa and Sacca state.

Earlier on Friday, in a public address about Covid-19 funding, Minister of Finance Tito Mboweni spoke of a "new economy" that could emerge after the lockdown ends. He said there will be new opportunities for companies to grow. Referenciing Gordhan, Mboweni said a new airline could arise from "the ashes of SAA".

Numsa and Sacca accuse the BRPS of having "an agenda to strip the assets of the airline" and to liquidate it.

"We are left with no choice but to approach the court, not only to remove them but also to demand a full breakdown of exactly how they have spent our hard earned tax money...This is a battle for the very survival of the airline and for all the working class families who will be affected " say the two unions.

Repeated bailouts 

On Tuesday the DPE informed the unions at a meeting, which excluded the BRPs, that SAA can no longer depend on financial support from government. This comes after government has repeatedly bailed out the airline over the years, often at the very last minute.

Representatives of the SA Transport and Allied Workers Union, National Union of Metalworkers of SA, the SAA Pilots' Association, the National Transport Movement, the Aviation Union of Southern Africa and the Southern Africa Cabin Crew Association were among those in attendance.

The DPE said all parties need to commit to a creative solution to avoid the business rescue process, which started in December last year, from failing. According to the DPE, a consultative forum would be established for talks on how best to ensure the well-being of employees.

NTM says it is seeking clarity from the DPE as to the options government can offer SAA employees. The union also points out that it would need longer than the current deadline given by the BRPs to caucus its members properly once it is clear what the various options and their implications are.

The union Solidarity has also expressed the need to obtain more clarity on the role and function of the so-called "Leadership Compact" proposed at the meeting with the DPE in lieu of the business rescue process.

"Not only are thousands of our members' and their families' livelihoods at stake, but also the entire airline industry and the economy of SA," Solidarity said in a letter to the DPE.

Back says SAAPA will not sign the employment termination contract put on the table by the BRPs in its current form. As for any other amended offers from the BRPs, SAAPA would, after due consideration, be required to first get a mandate from its membership to respond to the BRPs.

The BRPs said in response to the threat of legal action, that the Section 189 process continues and the offer of termination of employment is still on the table.

In the view of the BRPs a winding down process would obtain a better option for employees and creditors than a mere liquidation.

On Thursday the BRPs said the airline cannot survive beyond month end, and the choices left are either a forced liquidation or a winding down process. The practitioners said they do not have sufficient funds available to continue honouring the obligations of SAA to its employees beyond 30 April 2020.

"At this juncture, we wish to register our grave concern and disappointment that, despite substantial cash injection amounts that have been dedicated to the business rescue process, no plan has been forthcoming," says Solidarity.

"This delay in delivery...has, in itself, exacerbated the crisis that existed before the business rescue process. Our concerns are because sincere efforts to find a resolve may carry the unintended consequence of prolonging the entire process of business rescue, which SAA can ill afford."

The DPE referred Fin24 to the BRPs for comment.

* This article as updated to include comment from SAAPA, NTM, Saftu and Solidarity.

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