South African trade unions seek court action over job cuts at SAA

03 May 2020 9:51 AM
Two South African trade unions would like court action to try and block layoffs at the embattled state-owned South African Airways (SAA), according to court papers seen by Reuters on Friday.

SAA entered a form of bankruptcy protection in December and rescue specialists Les Matuson and Siviwe Dongwana proposed severance packages for most of SAA's roughly 5,000-strong workforce last month after the government said it could not provide any longer funds.

They gave trade unions until the end of business on Friday to reach an agreement on staff severances. Otherwise, the specialists "must make an urgent application for an order discontinuing the business rescue proceedings and positioning SAA into liquidation," they said on April 23.

However in court papers lodged on Thursday the National Union of Metalworkers of South Africa (NUMSA) and the South African Cabin Crew Association (SACCA) have asked the Labour court to order the rescue team to withdraw the proposed layoffs or suspend talks on job cuts until they have seen an enterprise rescue plan.

The unions want a hearing on, may 7.

The specialists, who declined to comment on Friday, have been distributed by creditors of SAA until May 29 to present the airline's business rescue plan.

SAA has not been profitable since 2011 and has received more than 20 billion rand ($1.07 billion) in bailouts in the past three years, a drain on public resources at the same time of weak monetary growth.

The fortunes of SAA which of its peers have deteriorated further with the COVID-19 pandemic which includes forced airlines to suspend all commercial flights carrying out a government imposed nationwide lockdown.

South African airline Comair said on Thursday that it was likely to cut jobs and is at talks with U.S. planemaker Boeing on the cancellation of 737 MAX 8 orders.

Comair, which operates the British Airways franchise in South Africa and owns budget airline Kulula, said it had also started negotiations with lenders to secure bridging finance.

The probability of raising additional equity capital was also being investigated, the company said.

"Although, the business was experiencing financial headwinds before the COVID-19 outbreak, the five-week lockdown has caused the problem to rapidly deteriorate," Comair said in a statement, adding it had not been anticipated that it would resume businesses before October or November 2020.