Amended SAA business rescue plan offers employees a better deal | Fin24

A South African Airways aircraft on the apron of Frankfurt Airport in 2018.

• SAA business rescue practitioners have proposed a new rescue plan ahead of the creditors’ vote next week. 
• The plan proposes a better deal for employees, including financial support and training during a temporary lay-off scheme.
• However, the plan still proposes that 1 000 of the airline’s currently 4 700-strong workforce should be retained. 

South African Airways employees are set to walk off with a better deal under amendments to the proposed business rescue plan for the embattled airline.

The flag carrier faces the prospect of liquidation if the plan is not adopted. Creditors are set to vote on the proposed plan next week, on 14 July.

A document published on Wednesday by insolvency practitioners Matuson and Associates thrashed out a range of benefits which have been proposed for the employees.

In an apparent concession to unions, while the restructured SAA will still retain 1 000 staff members of its 4 700-strong workforce, 1 000 staff will be placed on a temporary training or lay-off scheme for a year, during which time they will receive financial assistance towards UIF, as well as pension and medical aid payments. 

• READ | More unions at SAA agree to severance packages as vote on airline’s future approaches 

“SAA will contribute a maximum of R4 650 per month towards each employee’s pension, UIF and company medical aid in respect of the employees placed on temporary or training lay-off,” the document said.

This provision was not part of the previous plan.

The South African Cabin Crew Association has advised members to accept severance packages. About R2.2 billion has been put aside to fund these severance packages, according to the business rescue plan. 

The revised plan further states that employees who are retrenched will be in a “better financial position than in a liquidation” as they will receive full payment of their post-commencement claims. The retained employees will continue to be employed and receive their respective salaries.

In terms of creditors’ claims, lenders will exercise their right to utilise the government guarantee scheme if no payment takes place by 31 August 2020, according to the plan. No assets of the airline would be are made available to pay creditors’ claims in terms of the business rescue plan.

SAA went into business rescue in December 2019  following years of losses and repeated state bailouts.