The business rescue practitioners (BRPs) of South African Airways (SAA) have announced that they will begin consultations with employees under Section 189 and 189A of the Labour Relations Act.
Notices of the consultation were issued to all the recognised unions in SAA for employees and management, and the BRPs have been engaging with unions in relation to this process.
“Our intention has always been to preserve as many jobs as possible through this process while still focusing on having a sustainable airline and platform for growth”, said the BRPs.
The practitioners added that SAA has experienced numerous financial and business challenges, and cumulated losses of R26 billion over the past six years.
They said that load factors on the airline have declined steadily from August 2019 to a low of 71% in January 2020 and that the COVID-19 coronavirus would only make matters worse.
“The changes required at SAA are therefore both structural and economic,” the BRPs said. “They are urgent if liquidation is to ultimately be avoided in which event all employees will lose their jobs.”
“To avoid this scenario and to build a commercially viable business, the BRPs propose a fundamental restructuring of its business such that it can best meet market demands and operate as a sustainable African airline,” they added.
“The current structure negatively affects the efficient operation of the business and, in turn, its profitability and sustainability.”
Reduction in jobs and aircraft
The BRPs said that to achieve the goal of financial sustainability, they would need to reduce loss-making service and increase efficiency, which means the reduction of aircraft in the SAA fleet and further halting of services.
“We wish to confirm that this process involves the employees of SAA and not those of its subsidiaries, Mango, SAA Technical and Airchefs,” they said.
The cutting of employees is also needed to save the airline, and the BRPs said the job cuts would be exclusive to South Africa.
“Employees will be selected for positions within the new structure based on service length (LIFO), skills, qualification and experience in respect of the job categories indicated, taking into account employment equity objectives,” the BRPs said.
They said that all 4,708 employees at the airline would be affected and the number of jobs that exist in the restructured organisation would depend on the consultation process with unions.
“Significant changes to conditions of employment, including remuneration and benefits, appear unavoidable and will be sought by agreement.”
“Regrettably, this restructuring exercise, if implemented, may lead to positions being declared redundant across various job categories and in significant numbers,” the BRPs added,
“This may, in turn, result in the dismissal of employees employed by the Company, for operational reasons.”
The initial consultation will be held on 12 March 2020 and the process will last 60 days, ending on 8 May 2020.
However, the BRPs said that they had proposed an expedited process ending by no later than 8 April 2020 to avoid the liquidation of the airline.
“We must emphasize that no final decisions have yet been taken, nor will any final decisions be taken until we have exhausted consultation and hopefully reached agreement,” the BRPs said.