SAA severance packages

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South African Airways (SAA) is offering severance packages to its entire workforce of around 5 000, a proposal by the airline’s administrators showed, after government said it would not provide more funds for rescue efforts.

The proposal, put to trade unions last week and not agreed on, is the latest sign state-owned SAA is on the brink of collapse. Talks with unions resume this week.

SAA entered a form of bankruptcy protection in December, since when it suspended all commercial passenger flights due to the global coronavirus pandemic.

Last week government told administrators it wouldn’t provide more funds, lending guarantees or allow foreign financing of a business rescue plan.

According to the proposal, seen by Reuters, employees would see their employment terminated by mutual agreement on April 30. They would be entitled to a week’s pay for every year of service, a month’s pay in lieu of notice pay and pay for outstanding annual leave.

The proposal said it seemed “unlikely the company will be successfully rescued as a result of the business rescue process”.

“In order to make payment of the severance packages the company is required to sell and dispose of its assets,” it added.

An SAA spokesman declined to comment. Two unions confirmed the proposal and said they would discuss it with members.

The Department of Public Enterprises, which oversees the airline, said no agreements have been concluded about potential retrenchments as talks with creditors and unions continue.

“There are discussions with unions on alternatives to the current SAA business model, the success of the business rescue process and the best possible outcome for the airline’s employees,” the department said in a statement.

SAA has not been profitable since 2011 and 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.

Talks with unions were originally about job cuts, but one union said they developed into a discussion about winding down the airline.