New SAA hopes to start lean and grow from next year
South Africa’s new airline, which metamorphosed from the ashes of South African Airways (SAA), could start with as few as 764 employees and grow to 2, 222 by January. This is according to a proposed restructuring agreement document between government, labour, and SAA’s business-rescue practitioners.
According to mg.co.za, the 30-page working document, sighted by the Mail & Guardian is still being refined by stakeholders under the leadership compact, lays out the structure and the operating ethos of the new airline, which will begin operating as early as next month.
The leadership compact was championed by Public Enterprises Minister Pravin Gordhan and brought the government, labour unions at SAA, and the rescue practitioners to a single forum to discuss the SAA crisis and its effect on workers.
Information gleaned from this latest document, which is a heads of agreement between the compact’s forum members, shows that SAA 2.0, the new airline, could operate with 88 flight-deck crew, 176 cabin crew, 37 managers, 46 specialists and 417 ground staff from July 1 until the end of December to mitigate the risks associated with Covid-19.
The pandemic has laid to waste several airlines across the globe, while established ones have sought bailouts from their governments.
Last month, the M&G published an article that painted a gloomy picture for aviation in the country. It quoted an International Air Transport Association forecast that said the industry could shed as many as 186 850 jobs, and have 10.7-million fewer passengers, which would result in R42-billion in lost revenue and translate to R70-billion in losses to the wider economy.
The SAA planning document says: “The global crisis in the aviation economy caused by the Covid-19 pandemic has not distinguished between the giants of the industry and smaller operators. It has had a cataclysmic impact upon the industry, resulting in thousands of jobs being lost and created a market uncertainty due to the unpredictable market expectations post-Covid-19.”
It adds that this risk was being mitigated by starting the new airline on a “conservative” basis.
The growth of the new company and the number of employees required would depend on a number of factors, including the market, the new airline’s reputation and its ability to raise capital.
Funding options being explored include strategic equity partners, including the unions’ investments arms, as well as the sale of some assets.
“The start structure (July 1 2020) until the end of December 2020 and the positions require a complement of 764 employees for the start, which may include some employees on temporary layoff in order to have flexibility to respond to opportunities in the market. The contracts will be for a period of six months and, if an employee does not get a full-time position during this period, their contract will be terminated with the same benefits as the voluntary packages,” the document states.
The document also proposes new working conditions and as a social plan to regulate the voluntary severance and/or temporary layoffs as well as to assist those workers who are displaced to find new work.
In terms of the document, retrenched workers will be entitled to severance pay that will be capped at R500 000 a person, leave pay and a pro-rata 13th cheque, as well as an incentive payment of between R50 000 and R100 000, depending on salary earned.
It estimates that 53% of employees — 2 400 people — could be retrenched, at a cost of more than R1.4-billion.
This latest iteration of the working document, which is unsigned and still has notes for different members of the forum to address, has surfaced as the business-rescue practitioners, Les Matuson and Siviwe Dongwana, missed Monday’s deadline to submit the final business-rescue plan for the beleaguered airline.
SAA has been run by the rescue practitioners since last December and is headed towards liquidation after the public enterprises department rejected the practitioners’ R10-billion restructuring plan.
This then prompted Dongwana and Matuson to put into action a structured wind-down, which would see all employees terminated and paid severance packages, and all of SAA’s assets sold. The department and labour have opposed this plan, arguing that jobs could be saved through the formation of a new airline, which could be started using some of SAA’s current assets.
Despite signing a memorandum of understanding with the public enterprises department that sought to put the plan into abeyance, the rescue practitioners last month submitted a final draft rescue plan to Parliament, which put the cost of shutting down SAA at R21-billion. This amount included the R16.4-billion appropriated by the government in the next three years to pay off SAA debt it had guaranteed.
Yesterday was the deadline for the rescue practitioners to submit the final version of their plan. The M&G understands the document has also been forwarded to the public enterprises department — who will be the ultimate funders of the project — for comments on Tuesday morning.
