South African Airways (SAA) has issued notice to all 4 700 of its employees that it intends to begin consultations on retrenchments, the business rescue practitioners (BRPs) for the troubled national carrier said on Monday.
“The joint BRPs today announced that South African Airways SOC Limited has issued a notice advising its employees of the intention to begin imminent consultations in terms of section 189 of the Labour Relations Act 66 of 1995,” a spokeswoman for the BRPs said.
They stressed that retrenchments, along with route and fleet reductions, were essential to avoid liquidation and said therefore a shorter consultation process had been proposed.
The notices went out to all unions representing staff and management, following talks over the weekend and earlier with labour representatives.
A reduction in route flow as well as the airline’s fleet were unavoidable, and apart from cutting staff, salaries could also be reduced, said the BRPs.
“The BRPs contemplate that all 4 708 employees will be affected and the number of jobs that will exist in the restructured organisation will be the subject of the consultation process.
“Significant changes to conditions of employment, including remuneration and benefits, appear unavoidable and will be sought by agreement.”
They added that they would seek to preserve as many jobs as possible but cautioned that the outlook for SAA had dimmed further following the spread of the Covid-19 virus and its impact on international travel.
SAA has stacked up losses of R26 billion over the past six years and was placed in voluntary business rescue in December.
“Load factors on the airline have declined steadily from August 2019 to a low of 71 percent in January 2020. Forward sales have also declined significantly with all markets showing negative or minimal growth, within a very competitive market. The recent marked decline in travel due to the Covid-19 virus will further exacerbate matters.
“The changes required at SAA are therefore both structural and economic. They are urgent if liquidation is to ultimately be avoided in which event all employees will lose their jobs.”
The business rescue team, which is due to submit a report to government at the end of March, said they were proposing a fundamental restructuring to enable SAA to function as a sustainable African airline and the current structure did not allow for this.
The restructuring process at this stage does not affect staff at SAA’s subsidiaries Mango, SAA Technical and Airchefs.
Initial consultations with staff and representatives will be held on Thursday.
The legally prescribed 60-day consultation process would end on May 8. However, the business rescue practitioners said an expedited month-long consultation process ending April 8 had been proposed in an effort to avoid liquidation.
It is essential that this process achieve an agreement between the company and the unions that will be communicated to the creditors and the lenders as part of the business rescue plan, if the business rescue plan is to be approved and liquidation avoided.
“The business rescue practitioners believe that if this is achieved, SAA will be sustainable and the future of SAA can be ensured, without further fiscal assistance.”