Majority Unions of SAA call for Business Rescue Practitioners (BRPs) to act in the national interest

18 May 2020 

The global aviation industry is under immense and unprecedented pressure as a result of the Covid-19 pandemic. In an effort to ensure their airlines’ survival, many airline executives around the world have reduced their own pay – some by up to 100%.

In South Africa, SAA faces the double whammy of the national lockdown on top of the years of mismanagement perpetrated by SAA’s leadership. Yet here, by contrast, SAA’s executive and senior management – some of the highest paid airline executives in the country – have not offered to cut their salaries by one cent and still remain on full pay.

This is unconscionable. If we are to get SAA off the ground once again, all of us at SAA need to pull together and make the necessary sacrifices. For our part, as the major labour unions at SAA, we have offered to cut our pay by up to 49% for two months (with the higher earning SAAPA members willingly taking the highest pay cuts and, understandably, lower pay cuts for NUMSA and SACCA members and other lower earners, who will be further cushioned through the UIF TERS scheme).

However, inexplicably, the Business Rescue Practitioners have rejected our offer of a salary cut and, in doing so, have reneged on their previous commitment to accept it. This pay cut – to the tune of R82 million, was designed to buy enough time to restructure, right size and reform SAA.

We, as the major unions at SAA, are committed to working actively and constructively with Minister Gordhan in an effort to rescue our national carrier. And we are prepared to make the necessary sacrifices to do so. However, it appears as if no sacrifice will be enough to satisfy those who are intent on destroying SAA for whatever sinister reasons.

We have completely lost faith in the Business Rescue Practitioners. It is self-evident that they never intended to rescue SAA and, as such, six months later, there is no business rescue plan. Instead, they unfairly attempted to dismiss all employees and wind-down SAA which amounts to no more than asset stripping. 

We have noted with dismay that during their presentation to SCOPA on Friday 15 May 2020 the Business Rescue Practitioners stated unequivocally that their idea of a business rescue plan remains the winding down of SAA. Not only is this rejected as not constituting business rescue, but that statement directly contradicts their undertakings given in the Memorandum of Understanding they had signed with Minister Gordhan on 12 May 2020. The MOU states that they would “actively co-operate (with the Department of Public Enterprises) in the development of a Business Rescue Plan for SAA”, with the objective of creating a “restructured, efficient and sustainable airline.” 

As a result of the BRP’s rejection of the sacrifices Labour are prepared to make, employees are now under threat of not receiving salaries at all. This is especially difficult to swallow when one considers that the BRPs, their consultants and advisors have been paid some R200 million in fees since their appointment. In the last couple of days, the BRPs reportedly proceeded to further deplete SAA’s cash reserves by withdrawing another R2.5 million each as fees to themselves. A further R9 million has been paid out to consultants (despite the fact that there is no semblance of a business rescue plan). We believe that all this amounts to nothing but the looting of SAA as a national asset.

It is noteworthy that another R1.4 million was taken out of SAA’s coffers by the BRPs as payment towards their lawyers to appeal the recent Labour Court case which prevented them from retrenching employees. The BRP’s intention to appeal the Labour Court’s decision to interdict staff retrenchments – using public money – just proves that their objective is to counter the efforts of Labour and Government.

The BRPs – with no experience in the complex and low margin airline business – have been a monumental failure. So much so that many have been left wondering whether the BRP’s real modus operandi was in fact to sabotage efforts to resuscitate the airline. Because, in effect, this is what they have done.

By cutting SAA’s flights in February the BRPs crippled SAA’s revenue generating ability, whilst removing none of the overhead expenses. Since the national lockdown, the BRPs have failed to capitalise on numerous cargo flights and have allowed the SAA Cargo department to use other airlines to carry SAA air freight. All this while SAA employees, planes and infrastructure stand idle.

The BRPs have spent R9.9 billion in six months but have only sunk SAA into deeper distress. What is more, the BRPs have been found by the courts to have flouted the law by ignoring due process in their attempted retrenchment of employees. At the same time, they have held on to the same management team that brought SAA to the brink of this financial abyss in the first place.

The union leadership of SACCA, NUMSA and SAAPA who together represent more than 60% of SAA’s workers, call for:

- A forensic audit and PFMA investigation of all expenditure since the appointment of the BRPs;

- An immediate cessation of the BRP’s legal challenges and minimisation of consulting and legal fees; and

- If they are not willing to categorically support the vision of a new national airline, the resignation of the BRPs and withdrawal of their legal advisors.

In the meantime, organised labour (SACCA, NUMSA and SAAPA) and the DPE have formulated a strategic plan that outlines what a new and revitalised national carrier might look like. This plan will be fed into the analytical work underway and will ultimately take the form of a joined-up proposal for the rescue of our 85-year-old national airline.

We are sensitive to the pressure on the public purse, especially during this time of Covid-19. Our plan is therefore prudent and designed to make SAA commercially viable and financially self-sufficient. It will be disastrous for South Africa’s economic recovery if we are unable to provide vital airlift and connectivity when Africa and the world emerge from the current Covid-19 crisis.

We as the majority unions of SAA remain firm in our commitment to continue with our current engagement with the Department of Public Enterprises as the shareholder, in an endeavour to save SAA in the interests of the country. This we will do with or without the involvement of the Business Rescue Practitioners.

Issued by Phakamile Hlubi-Majola, National Spokesperson of NUMSA on behalf of SAAPA and SACCA, 18 May 2020