South African Airways overhaul talks hit dead end as government and unions disagree over terms

The airline was placed into a form of bankruptcy protection six months ago after its management failed to restore it to profitability

South Africa' s department of public enterprises withdrew from airline overhaul talks after disagreement with unions over job cuts. Reuters

South Africa’s department of public enterprises announced its withdrawal from a panel that was established to facilitate talks with the troubled national airline’s workers about its planned overhaul, accusing three labour unions of undermining its work and putting jobs at risk.

South African Airways was placed into a form of bankruptcy protection six months ago after a succession of managers failed to restore it to profitability and finance minister Tito Mboweni urged an end to repeated bailouts. Administrators this month published a rescue plan that would stave off the carrier’s liquidation by securing it at least 26.7 billion rand ($1.5bn/Dh5.6bn) in additional state aid, a first step toward laying the groundwork for a new, viable carrier.

The National Union of Metalworkers of South Africa, the South African Cabin Crew Association and the SAA Pilots Association reacted furiously to a proviso that the airline workforce be reduced by almost 80 per cent to 1,000 people. SA Airlink, a rival domestic carrier that says SAA owes it 700 million rand in ticket revenue, also objected to the plan, and a June 25 creditors’ meeting to vote on it was adjourned to July 14.

By supporting a delay to the vote, the three unions had “contradicted the letter and spirit” of a compact agreed by the consultative panel’s and created uncertainty for creditors and potential investors, the Department of Public Enterprises said in a statement. “Instead of creating conditions for attracting investment and skilled South Africans, three unions have put SAA on a path towards possible liquidation.”

The department urged the unions and their members to accept generous voluntary severance packages being offered by SAA, and focus on a plan that would equip them to get other jobs. Those that accepted the packages would be entitled to apply for jobs in the new restructured airline as it expanded, it said.