May 1, 2020 / 2:18 PM / a month ago

South African trade unions seek court action over job cuts at SAA

* SAA rescue specialists want unions to agree layoffs

* Unions apply for court hearing on May 7 to block plans

* Unions want to see business rescue plan first

* Creditors have given until May 29 for rescue plan

* Comair also seeking job cuts and bridging finance

JOHANNESBURG, May 1 (Reuters) - Two South African trade unions are seeking court action to try and block layoffs at the embattled state-owned South African Airways (SAA), according to court papers seen by Reuters on Friday.

SAA entered a form of bankruptcy protection in December and rescue specialists Les Matuson and Siviwe Dongwana proposed severance packages for all of SAA’s roughly 5,000-strong workforce last month after the government said it would not provide any more funds.

They gave trade unions until the end of business on Friday to reach an agreement on staff severances. Otherwise, the specialists “will have to make an urgent application for an order discontinuing the business rescue proceedings and placing SAA into liquidation,” they said on April 23.

But in court papers lodged on Thursday the National Union of Metalworkers of South Africa (NUMSA) and the South African Cabin Crew Association (SACCA) have asked the Labour court to order the rescue team to withdraw the proposed layoffs or suspend talks on job cuts until they have seen a business rescue plan.

The unions want a hearing on May 7.

The specialists, who declined to comment on Friday, have been given by creditors of SAA until May 29 to present the airline’s business rescue plan.

SAA has not been profitable since 2011 and has received more than 20 billion rand ($1.07 billion) in bailouts in the past three years, a drain on public resources at a time of weak economic growth.

The fortunes of SAA and that of its peers have deteriorated further with the COVID-19 pandemic which has forced airlines to suspend all commercial flights following a government imposed nationwide lockdown.

South African airline Comair said on Thursday that it was planning to cut jobs and was in talks with U.S. planemaker Boeing on the cancellation of 737 MAX 8 orders.

Comair, which operates the British Airways franchise in South Africa and owns budget airline Kulula, said it had also started negotiations with lenders to secure bridging finance.

The possibility of raising additional equity capital was also being investigated, the company said.

“Although, the company was experiencing financial headwinds prior to the COVID-19 outbreak, the five-week lockdown has caused the situation to rapidly deteriorate,” Comair said in a statement, adding it was not anticipated that it would resume operations before October or November 2020.

$1 = 18.7604 rand Reporting by Alexander Winning and Olivia Kumwenda-Mtambo; Editing by Elaine Hardcastle

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