April 25, 2020 / 5:53 PM / a month ago

UPDATE 1-S.African govt extends deadline for SAA severance deal to May 1

(Adds public enterprises department statement)

By Olivia Kumwenda-Mtambo

JOHANNESBURG, April 25 (Reuters) - South Africa’s government and specialists appointed to try to save the state-owned airline have agreed to extend a deadline for trade unions to agree staff severance terms, a letter from the public enterprises department showed on Saturday.

South African Airways (SAA) entered a form of bankruptcy protection in December and its fortunes deteriorated further when the coronavirus pandemic forced it to suspend all commercial flights.

The airline offered severance packages to its roughly 5,000-strong workforce after the government said it would not provide more funds for rescue efforts.

The proposal was put to union leaders, with the business rescue team advising that a deal should be reached by Saturday. However, that deadline has been extended until May 1.

“We advise that the department agreed with Business Rescue Practitioners on a moratorium on the signing of the retrenchment (layoffs) agreements until Friday 1 May 2020,” said the letter signed by Public Enterprises Minister Pravin Gordhan, which was addressed to unions at the airline.

“As a result, the employees are not obliged to sign the collective agreement for the retrenchments for the period of the moratorium,” the letter added.

The department later said in a statement that it also agreed that business rescue specialists Les Matuson and Siviwe Dongwana would not consider making an application for liquidation.

The business rescue team had said on Thursday that SAA faced a wind-down or liquidation as it had run out of funds.

“The leadership recognise the enormity of the challenge but are unequivocally committed to saving SAA,” the statement said.

A spokeswoman for the rescue specialists had no immediate comment.

SAA has not been profitable since 2011 and has received more than 20 billion rand ($1.1 billion) in bailouts in the past three years, a drain on public resources at a time of weak economic growth.

$1 = 19.0213 rand Reporting by Olivia Kumwenda-Mtambo Editing by Helen Popper and David Holmes

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