The Department of Public Enterprises (DPE) has expressed its appreciation for the cooperation and commitment of the pilots of South African Airways (SAA), expressed through the SAA Pilot’s Association (SAAPA), during the business rescue process for the beleaguered State-owned national flag carrier. The DPE has also “noted” that SAAPA has endorsed the voluntary severance packages (VSPs) that will be offered to each SAA employee should the proposed business rescue plan be approved by the airline’s creditors on July 14.
However, the DPE also expressed concern that the SAAPA was seeking benefits for its members that would, in the Department’s words, be “far more costly, more lucrative and financially rewarding for the pilots than any other class of employees at SAA”. The DPE could not agree to the SAAPA’s proposals.
“What SAAPA fails to recognise and accept is that the terms and conditions of employment of the pilots is still based on the premise that SAA is an internationally competitive and profitable company,” averred the DPE in its statement. “The reality is that SAA in its current form is financially unsustainable, insolvent and is in business rescue. What is important in this new reality is to avoid liquidation by getting the creditors to vote in favour of the business rescue plan and then starting the long and difficult journey to regain the lost market share in the domestic, regional and global market.”
According to the DPE, SAAPA had proposed major changes to the published business rescue plan. These included the reduction of the number of SAA employees to be retrenched from 3 647 to 1 548, with another 664 employees on furlough. The relaunched airline would have 2 000 employees, plus 435 on a temporary layoff scheme, as well as the furloughed workers. The staff members who kept their jobs would work 75% of their working hours and be paid 75% of their salaries. Pilots would also take a 20% salary cut and all other employees a 10% salary cut. Further, SAAPA had asked for an improved VSP for senior pilots, as well as the provision of opportunities for younger and especially previously disadvantaged pilots to pursue their careers.
The department regarded such proposals as unaffordable. SAAPA’s plan would, the DPE argued, concentrate the limited financial resources available into a few hands, particularly those of the pilots, under the guise of saving jobs. Accepting the SAAPA plan would only result in SAA having, in the relatively near future, to appeal for further funding to restructure again.
Under the current VSP offer, SAA pilots would collectively get more than R1-billion of the total VSP budget of R2.2-billion. SAA had 600 pilots, representing 13% of the workforce, but accounting for 45% of salary bill. Of the airline’s total pilot corps, 170 were senior pilots, and the lowest ranked of these senior pilots had an annual salary of R3.6-million, excluding incentives and benefits.
“The DPE believes that the VSPs and a positive vote to finalise the business rescue process would be the most expeditious option for the national carrier to restructure its affairs, its business, debts and other liabilities, resulting in the emergence of a new viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services,” it stated. The VSPs can only be implemented if the SAA creditors vote in favour of the business rescue plan.