The business rescue of South African Airways has been a “horrific” failure, with “unquestionably incompetent” rescue practitioners abandoning all efforts to save the airline and instead proposing to doom several thousand workers to unemployment, say the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca), who will this week apply to the courts to remove the business rescue practitioners.
It has been a bitter lockdown for about 5 000 workers at SAA and SA Express. SAA workers still face the axe after Minister of Public Enterprises Pravin Gordhan said earlier this month that the government would not allocate any extra funds to the airline.
SA Express workers were not paid their salaries at all at the end of March and by 22 April 2020 were facing a second month without salaries. At the time of publishing, the Unemployment Insurance Fund (UIF) had failed to respond to SA Express’ application for help with the March salaries, leaving workers with no hope they will receive any support at the end of April.
The ANC government has not offered to absorb the workers into other state-owned enterprises, instead indicating that they will have to fend for themselves in a job market that has no available positions.
“It is very distressing for employees of SA Express to have been forced to endure a lockdown without salaries. Some are running out of food and basic items for their families, and this is worsening their suffering. It is a tragedy that workers are suffering unnecessarily because those at the top ignored advice from the CCMA in December to apply for financial relief,” said Numsa general secretary Irvin Jim and Sacca president Zazi Nsibanyoni-Mugambi in a joint statement.
Last year, business rescue practitioners Les Matuson and Siviwe Dongwana were told to come up with a plan to save the airline. Instead, they presented Numsa, Sacca, Solidarity, the Pilot’s Association and two other unions with a pre-drafted agreement to sign.
The agreement said that if it seemed “unlikely that the company will be successfully rescued as a result of the business rescue process” the parties would agree that all workers would be terminated “by mutual agreement” on 30 April. Workers would receive the standard retrenchment payout of four weeks salary plus an additional week’s salary per year worked, but this would only happen six months after SAA had sold off all its assets and called in all its trade debts. The business rescue practitioners gave SAA up to two years to sell everything. The retrenchment packages would also only be honoured if SAA had recouped enough money to cover the cost of the payouts. Signing would have meant agreeing to a slim possibility of workers receiving retrenchment pay in 2023. In essence, instead of coming up with any rescue plan at all, the business rescue practitioners were asking the unions to agree to the termination of their members in advance.
The unions immediately rejected the agreement. Jim and Nsibanyoni-Mugambi said the business rescue practitioners had failed to come up with any rescue plan. “Instead, they were advancing a sinister agenda to close SAA and strip it of its assets” said Jim and Nsibanyoni-Mugambi.
“If we sit back and allow thieves and looters to destroy our SAA for personal enrichment, then it means none of our state owned enterprises are safe,” said Jim and Nsibanyoni-Mugambi.
Numsa and Sacca had proposed cost saving measures long before the business rescue began, including getting rid of expensive American human resources consultants who have cost SAA more than R500 million over the past two decades. The unions also proposed termination of a costly catering contract with a German company, with catering to be insourced, and that expensive fuel costs and pricey aircraft rental agreements be investigated. Other money wasting areas include tenders which had been given to both local companies and companies based in India for accounting and human resources projects that could have been done by the airline’s employees. The unions said money could be freed by insourcing baggage loading, security, cleaning and call centres, which had all been outsourced. The business rescue practitioners did not investigate any of these, said Numsa and Sacca. Instead, they took “dodgy decisions like the cancellation and grounding to flights, a move which was clearly designed to collapse and liquidate the airline” the unions said.
Business rescue gone wrong
The business rescue plan was born out of an application by a minority union at the airline, Solidarity. A historically rightwing union of mainly white members with roots in the pro-apartheid Transvaal Miners’ Association, Solidarity supports a free market economic ideology and advocates the rights of minority groups.
In early December 2019, Solidarity applied to the courts to have SAA placed under business rescue. It was suggested to other unions that business rescue would open a space for influential business rescue practitioners to finally hear the unions’ suggestions that SAA cut out wasted and irregularly spent money, saving enough to keep the airline afloat.
Solidarity’s application meant business rescue practitioners took the place of Gordhan’s department in winding down SAA’s operations. It was a boon for Gordhan to have these practitioners doing this work instead of him, creating the impression that he was at arm’s length from inevitable privatisation and retrenchment.
The unions say they quickly discovered that once the business rescue practitioners began work, they were no more receptive to the unions’ money-saving proposals than Gordhan was. Their request this month for R10 billion, immediately rejected by Gordhan, seems to prove this.
“The [business rescue planners] have been inappropriately consulting in the development of the business rescue plan with only selected affected persons, to the exclusion of Numsa and Sacca. We have not been consulted at all on the development of the business rescue plan,” said Jim and Nsibanyoni-Mugambi.
The workers pay
The unions now believe the business rescue has been a sham. While stating publicly that he wanted to keep SAA afloat, Gordhan gave off strong signals that the airline would be shut down. After the unions went on strike in November 2019 for a pay increase, the Department of Public Enterprises immediately announced that they would need to radically restructure the airline as a result of the strike, claiming it had caused “immense damage to the reputation, operations and the deterioration of the finances of SAA”. This is preposterous, given the billions wasted on fruitless payments during the Thabo Mbeki years and the state capture corruption at the airline during the Jacob Zuma years.
The unions have now been forced into a consultation over the proposed retrenchment of SAA workers. Perhaps to buy time, the unions have said before negotiations commence, the government must agree to a framework that the talks will be held with the aim of saving SAA. But it is unlikely a genuine agreement will be reached.
It shows bad faith for the government to begin a consultation process having already decided the outcome. Numsa and Sacca have frequently alluded to this, saying they “had several long-term protracted engagements with the SAA board and the shareholders in a bid to save the airline, even before the business rescue process started. Unfortunately, these engagements lacked the openness and honesty required to avert the current calamity that SAA currently finds itself in,” said Jim and Nsibanyoni-Mugambi.
The unions now need massive public support if they are to sway the government. When the coronavirus pandemic ends and planes take to the skies again, it is unlikely that any buyer – if there even is a buyer for SAA – will retain thousands of workers. The spectre of 5 000 workers and their families being plunged into poverty at a time when over 20 million are already living below the poverty line in South Africa is ghastly and unjust.
This wilful collapse of the national airline should not be seen as unfortunate, inevitable or as business as usual. The public should take strong action to force the ANC to guarantee SAA and SA Express staff continued employment at their current salaries and not make grassroots workers pay for two decades of wasteful expenditure and state capture brought about by the political elites.