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South African Airways, Unions Clash over Liquidation

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South African Airways, Unions Clash over Liquidation

South African Airways, Unions Clash over Liquidation
June 29
14:47 2020

MIAMI – There is no doubt trade unions are a fundamental building block of democracy. They protect workers’ rights, fighting for their best interests, and preventing overzealous corporations from getting out of hand.

Johannesburg based South African Airways (SAA), formed in 1934, entered a high profile bankruptcy in May 2020. Despite the carrier struggling to maintain profitability for many years, the final blow was the global COVID-19 pandemic.

The airline and its creditors have been negotiating a Business Recovery Plan (BRP). The BRP is a document aimed at moving the airline forward or potentially liquidating its assets, then forming a new national carrier.

SAA Airbus A350. Photo: Jochen Schiermeyer – @CGNJets.

The Three Unions

South African Airlines’ staff is represented by three trade unions. The National Union of Metal Workers of South Africa (NUMSA), the South African Cabin Crew Association (SACCA) and the Airline Pilots Association of South Africa (ALPA-SA).

On Thursday June 25, a meeting was held by stakeholders to direct the Business Rescue Practitioners (BRPs). The three unions combined forces and worked together for an adjournment. The successful motion has seen the voting on the final plan pushed back to July 14, 2020. 

The plan would see approximately 3,700 of the airlines 4,700 staff made redundant. The plan also seeks to find R26.7m of state aid and to sell airline assets. Earlier this year, the airline announced its intention to sell nine A340 series aircraft and 15 spare engines plus other assets.  

The unions, however, fear that the plan would effectively liquidate the airline, though it is felt by all three unions that with careful handling, the airline could return to profitability. Rather than liquidation, then, the unions seek for the carrier to resume operations on profitable routes in July 2020.

South African Airlines has long faced criticism for corruption stemming back over the past decade. The unions claim this has included various contracts for outsourcing work to private companies. There are calls for such work to be returned in-house with significantly lower overhead costs.

The Department of Public Enterprises

The Department of Public Enterprises, which oversees how public money is spent in South Africa, has withdrawn its representative from the panel, established to represent the workforce of the airline.

The Department made its position in the matter clear when it said that “Instead of creating conditions for attracting investment and skilled South Africans, the three unions have put SAA on a path towards possible liquidation.”

Said Department had urged the unions to accept the proposals of the BRP and the severance package. The package per worker is estimated to be worth R32,000 or about US$1,500. Those accepting the package would be entitled to apply for positions with the new airline as it expands again in the future.

South African Airways Airbus A350-941 ZS-SDE. Photo: Kochan Kleps

The Goodwill of Staff

The unions remain firm that the airline should fly again in July 2020, making clear their opposition to the BRP. By urging the government to offer a stimulus package to the aviation sector, it is hoped that such a package would support the industry.

The aviation industry has always been fickle; when times are good, airlines often trade without regard for the rights of staff and customers alike. Times are very demanding now, however, and airlines require the goodwill of staff and customers to see out the devastating effects of Covid-19.

Time will tell if the BRP set to be voted upon in the middle of July will make a suitable compromise between the unions and creditors. It is hard to judge if there is any scope for the recovery of SAA, especially in this new era of post-COVID-19 instability.


About Author

Ryan Taylor

Ryan Taylor

Originally from the Midlands I now live on my rock in East Anglia. I am a keen trade union activist and advocate for workplace health and safety. I have been aviation mad for nearly two decades and a keen photographer for a decade. Occasionally I like to turn my ready wit and quirky wordplay to writing as well. I have a cultish obsession with the mighty Boeing 747, the finest aircraft to ever grace the skies

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