SAA Collapse: Government shoots down BRPs request for immediate funding of retrenchments
CAPE TOWN – The business rescue practitioners (BRPs) of the embattled South African Airways (SAA) on Thursday said that they did not have sufficient funds available to continue honouring the obligations of SAA to its employees beyond April 30 and to bear the costs of the wind-down process.
The BRPs Siviwe Dongwana and Les Matuson said in a statement that at this stage, they had made requests to the government for the immediate funding of retrenchment packages but these requests had not been successful.
Dongwana and Matuson said the imminent wind-down process was dependent upon employees accepting the termination of their employment timeously by mutual consent.
“If the practitioners cannot reach an agreement with employees, then the practitioners are unable to continue with the business rescue process and the practitioners will have to make an urgent application for an order discontinuing the business rescue proceedings and placing SAA into liquidation,” they said.
The BRPs said given the fact that they had no further funding, they had considered whether they could develop a business rescue plan that would secure a better return for SAA’s creditors than would result from its immediate liquidation.
“This entails a wind-down process that would envisage the termination of the employment of employees by agreement (with severance packages being agreed), a sales process being undertaken which will ultimately result in a distribution of such proceeds to affected parties who are entitled thereto in terms of the business rescue waterfall. If an agreement can be reached with the employees, a business rescue plan can be developed and published,” they said.
The practitioners on April 17 presented a collective agreement to all unions and representatives of non-unionised employees of SAA for consideration and negotiation and advised that agreement must be reached by April 24.
Dongwana and Matuson said this agreement sought to provide the state-owned airline’s employees with the opportunity of concluding a mutually agreed separation of employment.
The National Union of Metalworkers of South Africa (NUMSA) and the South African Cabin Crew Association (SACCA) on Monday outrightly reject the proposed collective agreement dealing with mass retrenchments at the embattled airline.
NUMSA and SACCA said in a joint statement, after receiving communique from one of the two joint business rescue practitioners (BRPs), that: “We have always been clear that we had to be consulted in the formulation of a business rescue plan, and, therefore, we have not participated in the Section 189A process at SAA based on the fact that to date there is no business rescue plan.”
The unions said the BRPs had been inappropriately consulting in the development of the business rescue plan with only selected affected persons, to the exclusion of NUMSA and SACCA. “We are an important stakeholder in this process but we have not been consulted at all on the development of the business rescue plan and instead we are being presented with a purported collective agreement, which is entirely inconsistent with an attempt to save SAA. It’s against this backdrop that we outright reject this proposed agreement.”
SACCA and NUMSA said they were engaged in talks with the shareholder and were of the firm belief that SAA could be saved and would be saved. “We, therefore, see no need to subject workers to these horrific offers that are being made by one of the BRPs, in the absence of a business rescue plan.
“We are alive to the fact that SAA will not survive in its current form and NUMSA and SACCA believe that it is time for extensive deliberation on options on how SAA can survive and in what form and that is exactly what we are engaging on right now.”
Intellidex head of Capital Markets Research Peter Attard Montalto said with no funding available from any quarter SAA was effectively on its death bed. The question was how it would be liquidated, in particular given Mango, which is is 100 percent owned by SAA, was not bankruptcy remote.
“We see a fire-sale of Mango, technical and catering as part of the process,” said Montalto.