South Africa Opens New Battle With Unions Over Airline Wages

South Africa faces a fresh battle with labor groups in its effort to revive the bankrupt state airline, offering three months of wages to employees who haven’t been paid since March.

The government’s Department of Public Enterprises and the National Union of Metalworkers of South Africa were scheduled to discuss the matter late Tuesday, according to a spokeswoman for the labor group, only for the state to call it off. Numsa and the South African Cabin Crew Association, another union, had expected members to be paid in full, in line with the country’s legal framework for a business-rescue process.

Numsa can’t yet say if it will accept or reject the three-month offer for South African Airways staff, spokeswoman Phakamile Hlubi-Majola said by text message. “We can only say that the DPE must not forget that workers have made major sacrifices,” she said.

The new flareup represents another barrier to South Africa’s plan to get SAA to fly again, about a year after the loss-making carrier first went into bankruptcy protection. While administrators published a rescue plan in June, the state has struggled to source the required funding and a search for an outside investor has been inconclusive. The effort has been made significantly harder by the Covid-19 pandemic, which has hobbled both state finances and demand for international air travel.

SAA hasn’t flown a commercial flight since March, when its fleet was grounded to help contain the coronavirus.

Reduced Workforce

The administrators calculated that 2.2 billion rand ($147 million) would be needed for employee costs, which included both back payments for those sidelined and voluntary-severance packages. The new SAA is seen having a workforce of about 1,000 employees, down from about 4,800 before going into bankruptcy protection, a reduction agreed to by most labor groups in July.

Finance Minister Tito Mboweni allocated about 10.5 billion rand for SAA from other state budgets in October, and 1.5 billion rand was transfered at the start of this month. However, the administrators say the cash can’t be used as the government attached conditions that breached labor and companies regulation. About 1.2 billion rand is needed to pay back salaries, according to their spokeswoman.

The DPE released a statement late Monday urging unions to accept the three-month offer, citing the “deep cuts” the government has already made to fund SAA. “Further concessions that will lead to increased demands on the fiscus will not be agreed to,” the ministry said.

A DPE spokesman couldn’t immediately comment on why the Tuesday meeting didn’t take place.

“It is extremely unfair,” SACCA President Zazi Nsibanyoni-Anyiam said by phone. The union is willing to discuss deferring some of the payment of salaries, or taking it in some form of equity, she said.

The offer will not be accepted “on our watch,” Grant Back, chairman of the South African Airways Pilots Association, said on Monday.

©2020 Bloomberg L.P.

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