KEMPTON PARK: It appears that the end is finally here for South African Airways, with discussions taking place for how to lay off all 4,700 staff at the airline.
South African Airways plans to lay off its entire workforce after failing to persuade the government to provide more financial help, a move that threatens to ground the 86-year-old national carrier good.
The state-owned airline has offered severance deals to all staff from the end of this month after administrators concluded that a successful turnaround is now unlikely, according to a proposal to eight labor groups seen by Bloomberg News. The basic value of compensation will be one-month pay per year of service and will depend on the successful disposal of assets such as real estate, according to the document.
SAA has relied on bailouts and state-guaranteed debt agreements for years, having last made a profit in 2011, and was put into a form of bankruptcy protection in December. Public Enterprises Minister Pravin Gordhan said earlier this week that the cost of staving off the Covid-19 pandemic in the country meant no more cash could be extended, while Finance Minister Tito Mboweni said the carrier’s closure could help shore up state finances.
The coronavirus may prove the final nail in the coffin for SAA, which was reducing routes and considering job cuts even before the outbreak forced airlines around the world to ground planes. The industry could lose $314 billion in ticket sales this year, according to the International Air Transport Association, as lockdowns and travel bans take an increasingly heavy toll on the global economy.
The team of administrators led by Les Matuson and Sizwe Dongwana will now look to sell assets and raise cash to repay creditors. Two prized nighttime operating slots at London’s Heathrow Airport could be up for grabs, people familiar with the situation said in February.
The airline has seen at least nine chief executive officer changes in the past decade, hampering attempts at a turnaround, while responsibility for the carrier was passed from the Department of Public Enterprises to the National Treasury and back again.
Employees will be getting one month of pay, plus one week of pay for every year of service. In other words, an employee that has been at the airline for 30 years would get about eight month’s worth of pay. The ability of the airline to pay this is dependent upon successful sale of assets.
