May 1, 2020 / 2:53 PM / a month ago

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

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

FILE PHOTO: A South African Airways (SAA) plane is towed at O.R. Tambo International Airport in Johannesburg, South Africa, January 18, 2020. Picture taken January 18, 2020. REUTERS/Rogan Ward/File Photo

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 rescue 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.

The public enterprises ministry reiterated in a statement on Friday that it wanted to see SAA restructured into a new airline.

“Airlines around the world are failing, but with the correct vision, leadership, business and operating model, funding and implementation the new national carrier will be well positioned to take to the skies again,” the ministry read.

The ministry made no mention of NUMSA and SACCA’s court case or the talks between unions and the SAA business rescue team over severance packages. A ministry spokesman was not available to elaborate on the statement.

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 (COMJ.J) said on Thursday that it was planning to cut jobs and was in talks with U.S. planemaker Boeing (BA.N) 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 and Hugh Lawson

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