MIAMI – South Africa’s Department of Public Enterprises (DPE) has asked South African Airways (SA) employees to accept less payment than that previously agreed on.
Under the DPE’s new payment terms, airline employees would be paid only three months rather than the eight months established in SA’s rescue plan, reported Bloomberg and citing a labor union leader. As a first response, the Chairman of SA’s Pilots Association Grant Back said that this offer would not be accepted on the union’s watch.
The DPE had claimed that it considered the newly proposed agreement with the unions fair. However, it said that certain associations were “deliberately undermining” SA’s rescue process and seemed to be in “alliance with opposition parties.”
A Stalled Rescue
Just last week, the government granted initial funding of US$99m to the airline to stave off bankruptcy. According to Bloomberg, the approved rescue plan also detailed payments that included severance packages for dismissed workers.
In the middle of the conflict, the administrators of SA had said that they could not use the mentioned funding. Their reason was that the conditions imposed breached labor and company regulations.
On this, the Chairman of the SA Pilots Association said that the DPE wanted that some of the money injected into SA was given to the subsidiaries that were not part of the business rescue. In the country, under this type of process, the payment goes first to advisers, and then to secured creditors and employees for any work done during this period.
Amid this uncertain scenario, the South African Finance Minister expressed his concerns about the rescue process. for now, we have to wait and see how the situation evolves. So far, SA administrators have said the airline would not fly again until the government injects the promised funds.
Featured photo: South African Airways Airbus A340-313. Photo: Julian Herzog.