The National Union of Metalworkers South Africa (Numsa) has approached the Johannesburg Labour Court for an urgent interdict to compel the management of airline Comair to pay outstanding salaries and continue making medical aid contributions on behalf of employees.

A hearing has been scheduled for September 9.

The trade union says the airline has not paid its employees' salaries since June 1 and that it has "unilaterally and unlawfully" imposed unpaid leave on all its staff.

This followed shortly after Comair was placed under business rescue.

Numsa adds that the company has informed employees that it can no longer make medical aid contributions and that they are required to either pay the premiums themselves, downgrade their option or cancel their cover.

Subsequently, on August 26, Numsa reports that the business rescue practitioners (BRPs) gave employees unequivocal assurance that medical aid cover was in place and secure, only to renege on that agreement.

“The BRPs then, on August 31, advised employees that they and their dependants will be without medical cover from September.

“It is unconscionable that employees and their families can be abandoned like this in these challenging times,” the union states.

Numsa believes the actions of Comair and its BRPs are in direct contravention of Section 136 of the Companies Act, which provides absolute protection to employees during business rescue proceedings.

“We understand the lockdown has had an impact on the revenue of the airline, but they have had an opportunity to resume flights since June 1 and they have deliberately chosen not to do so, for reasons only known by them.

“Clearly employees were not a priority and funding was used for other purposes and to protect the interests of other stakeholders at the expense of workers,” the union notes.

Numsa adds that the BRPs have also proceeded to publish a business rescue plan, and in that plan employees are required to sign agreements waiving all their rights to remuneration until December 1.

Numsa states that it was not consulted on what is contained in the business rescue plan and says it disagrees that employees should make such sacrifices in circumstances where Comair and the BRPs are acting unlawfully.

Comair on September 2 published a business rescue plan, which creditors and shareholders have until September 18 to consider.

The publication of the plan follows negotiations with a preferred investor which will see a fresh equity injection of R500-million in return for a 99% shareholding. Up to 15% of this shareholding will be allocated to a suitable broad-based black economic empowerment partner within 12 months.

The turnaround plan is focused on rationalising operating costs and growing ancillary revenue.

In line with this, the workforce will be reduced from about 2 200 employees to 1 800 through voluntary retrenchment and early retirement programmes, as well as the continuation of the Section 189 retrenchment process that the company commenced prior to business rescue. The fleet will comprise 20 aircraft of which 17 will be next-generation Boeing 737-800s and the remaining three Boeing 737-400s. This fleet mix increases the proportion of owned aircraft, which limits exposure to foreign currency risk.

Comair explains in a release on its website that the aircraft will gradually return to service from December, with a seven-month ramp-up period until June 2021.

Other elements of the offer include maintaining the existing relationships with British Airways, Discovery Vitality and Boeing.

In the event that the suspensive conditions in the plan are not met, the plan details how the company will be wound down in a structured manner, as this will achieve a better return for creditors than a liquidation.

Richard Ferguson, one of the BRPs says that, if creditors approve the plan, the business rescue process should be concluded by March 31, 2021, if not sooner, after which Comair will continue to operate as a sustainable business.

“It is important to understand that what happened to Comair was the result of an ecosystem problem that has seen some 600 airlines around the world cease to operate. It was not something that was business specific. Comair is a national asset. Getting it back in the air will save 1 800 jobs, provide the flying public with more choice and competitive fares, strengthen the aviation sector and contribute to the broader South African economy.”

Comair tells Engineering News that it has done everything possible to limit the hardship its employees have experienced since going into business rescue. This has included applying for Unemployment Insurance Fund and other relief, while continuing to pay medical aid contributions until funds were exhausted. 

"If the business rescue plan is adopted all medical aid contributions will be funded by Comair.

"The unfortunate reality is that as a result of the national state of disaster the company is unable to earn any revenue. While restrictions have been eased, Comair cannot begin flying until the business rescue plan is adopted and funding becomes available. Until then, it simply does not have the money to re-start operations.

"The union’s decision to go to court comes at a critical time when creditors and other affected parties are considering the business rescue plan. It is possible that the unions’ action could result in the plan not being adopted in which case the business will be wound down and no Comair employees will have jobs," Comair says.