Public enterprises dept withdraws from SAA's restructuring forum

A South African Airways aircraft on the apron of Frankfurt Airport in 2018.
A South African Airways aircraft on the apron of Frankfurt Airport in 2018.
Silas Stein/picture alliance via Getty Images
  • The Department of Public Enterprises (DPE) says the Leadership Consultative Forum has not served its purpose.
  • The forum was established to facilitate employee engagement as the SAA business rescue practitioners work towards developing a new operating model for the airline.
  • The department is accusing three of SAA workers' unions of siding with SA Airlink, the competitor that applied to liquidate SAA.
  • But one of the unions says it was the DPE that raised concerns about SAA's business rescue plan in the first place.

The Department of Public Enterprises (DPE) has withdrawn from the forum that was supposed to develop a new business plan for South African Airways (SAA), as business rescue practitioners (BRPs) of the ailing state-owned airline are trying to avoid going the liquidation route.

On Sunday afternoon, the department issued a statement saying that it would no longer be participating in the Leadership Consultative Forum (LCF) because stakeholders - including trade unions Numsa, the SA Cabin Crew Association (SACCA) and the SAA Pilots’ Association (SAAPA) - were siding with SA Airlink, the competitor that wants to liquidate SAA.

"In terms of a Leadership Compact, signed by all participants of the LCF, the DPE is giving notice of its immediate withdrawal, as the LCF is not serving its intended purpose," the department said in a statement.

The department established the LCF – also known as the Labour Consultative Forum – in April to facilitate employee engagement, as the BRPs worked towards developing a new operating model for the restructured SAA. The forum was also meant to support the transformation of SAA into a strategic national asset which is not dependant on the fiscus.

But now, the department says the forum is failing to protect workers' interests. It said the BRPs had convened a creditors’ meeting on 25 June to consider and vote on the business rescue plan that they have proposed for SAA. But, together with Airlink, Numsa, SACCA and SAAPA chose to adjourn the creditors’ meeting until 14 July.

The department said that, by supporting the adjournment of the creditors' meeting, the unions had put retention of jobs at SAA and the proposed employees' severance at risk.

"In supporting SA Airlink to postpone the creditors vote, Numsa, SACCA and SAAPA have effectively aligned themselves with a competitor who stands to benefit substantially should SAA be liquidated. This is an anti-worker stance," it said.

The department has recommended voluntary severance packages for SAA employees which include a 13th cheque and a top-up, which it says meets the requirements of Basic Conditions of Employment Act and Labour Relations Act.

"This [creditors' meeting] postponement, also creates uncertainty for creditors and potential investors. Instead of creating conditions for attracting investment and skilled South Africans, three unions have put SAA on a path towards possible liquidation," read the DPE's statement.

Union says DPE was the first to reject the business rescue plan

But SACCA president Zazi Nsibanyoni-Mugambi said the union rejected the claim that it is siding with SA Airlink. It said, in fact, it was 69% of SAA creditors, and not just SA Airlink, who voted for the adjournment.

"The DPE themselves are the ones that stated many weeks ago, before the plan was even announced publicly, that the plan did not meet the standards. For them now to support a plan is completely bogus. Actually, they should have said 'thank you for saving the day'," said Nsibanyoni-Mugambi, adding that most creditors also voted for the adjournment because of the DPE's initial scepticism around the business rescue plan.

The department also accused the forum of not making meaningful proposals for SAA's amended business rescue plan. It said it has also not helped to ensure that SAA could resume its flight operations as soon as possible.

But Nsibanyoni-Mugambi said the department had never considered any of the inputs that the LCF had presented to the BRPs.

"They never presented anything as the DPE that we had worked on in the LCF," she added.

Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
I'm not really directly affected
18% - 1773 votes
I am taking a hit, but should be able to recover in the next year
23% - 2330 votes
My finances have been devastated
35% - 3484 votes
It's still too early to know what the full effect will be
25% - 2499 votes