- SAA Technical is one of the subsidiaries of SAA and not in business rescue.
- However, employees have not received their full salaries for the past 11 months.
- It is as yet uncertain if some of the money provided to SAA will be allowed to filter through to SAAT.
While the Department of Public Enterprises (DPE) keenly awaits the completion of the implementation of the business rescue plan of South African Airways (SAA), employees of its subsidiary, SAA Technical (SAA) are still in the dark about their future, it seems.
Unlike SAA, its subsidiaries are not in business rescue and therefore fall outside the scope of the business rescue practitioners.
SAAT is one of SAA's creditors. In terms of SAA's rescue plan, creditors such as SAAT will only get about seven cents to the rand for the millions owed to it.
The Aviation Union of Southern Africa (AUSA) informed its members in a letter dated 16 February, and seen by Fin24, that it met with SAAT last week.
The company was, however, unable to give the AUSA representatives any positive indications regarding the business and its finances going forward. The union representatives were told that the board and shareholder are working tirelessly to seek funding for SAAT.
No confirmation could, however, be given that SAAT will receive any funding from the R10.5 billion provided by Treasury in the mini-budget to implement SAA's business rescue plan. Although the plan mentions that SAA subsidiaries like SAAT and low-cost airline Mango, would need funding, it does not provide for that to come from the R10.5 billion.
However, SAA's shareholder, the DPE, has indicated in the past that it has always been its understanding that some of that money would also be able to be passed through to subsidiaries like SAAT, Mango and AirChefs.
AUSA hopes to meet with SAAT again in the near future. The union has also requested an urgent meeting with the board.
Since March 2020, SAAT employees received only part of their salaries. Outstanding salaries of SAAT employees as from September 2020 until December 2020 are R144 681 068. The percentage salary payable for January 2021 was 50%.
Nelson Lamityi, the national coordinator on aviation of the South African Transport & Allied Workers Union (Satawu) says whatever funding has been made available for payment to SAA employees, some of that should, "by nature", also go towards employees of its subsidiaries like SAAT.
The union hopes to meet with the DPE soon in order to discuss the matter, as well as possible solutions going forward.
"Workers must be given first preference to cushion them against the challenges faced by SAA and its subsidiaries.
SAA's rescue practitioners are in the process of making payment to former employees who opted for voluntary payment packages.
Derek Mans, of union Solidarity, describes the state of SAAT as that of a patient already in ICU.
Solidarity started a process in about May 2020 in which it talked with the DPE about the need for a business plan for SAAT.
"The business plan would have informed the funding required to continue with business, because the DPE cannot give funding or even obtain bridging finance from a bank if there is no business plan. That process of drawing up a business plan should have taken about two months to complete, and look, here we are almost a year later and still no business plan," says Mans.
Furthermore, within that time period various executives, including CEOs, resigned at SAAT and currently the majority of the executive team are in acting positions.
SAAT's biggest clients are SAA, Mango and Comair. They currently pay for services rendered on a monthly basis. In October 2020 Mango was grounded due to SAAT refusing to do work for it until it paid for the services rendered. Solidarity and The Mango Pilots Association facilitated negotiations to get Mango off the ground again.
"Remember, the backpay owed here is not like at SAA mainly for a period when employees did not actually work. The SAAT employees actually rendered services during that time," says Mans.
AUSA, Solidarity and Satawu have formed a coalition at SAAT and submitted proposals on a business plan for the SAA subsidiary.
"The problem is every time one has to deal with new board members and executives. We have requested an urgent meeting with the SAA board and SAAT board. The problem is that the SAA rescue plan does not provide for finance to SAA subsidiaries, despite the DPE wanting funding for SAAT and other subsidiaries to come from money given to SAA to implement the plan," says Mans.
It has been estimated in the past that Mango still owes SAAT more than R500 million apart from monthly payment for services rendered. It is with this monthly income, mainly from Comair and Mango, that SAAT is able to pay a portion of employees' salaries each month - ranging from between 25% to 50% of what is due, but no payments for pension fund contributions.
The rescue practitioners responded that they cannot comment on SAAT as it is not in business rescue please. The DPE says it has no comment at this point in time.
* This article was updated with responses by the SAA rescue practitioners and DPE as well as comment from Solidarity.