South African Opposition Objects to SAA Approach to Worker Fund

(Bloomberg) --

South African Airways’ business rescue practitioners, who are overseeing the carrier while it undergoes a local form of bankruptcy, have inappropriately approached the Unemployment Insurance Fund for assistance, the opposition Democratic Alliance said.

The practitioners confirmed to the DA that they had met with the UIF “to seek solutions to alleviating financial challenges to both SAA and its employees,” the political party said in an emailed statement on Wednesday.

The move by the practitioners indicates job cuts are being considered as part of a turnaround plan for SAA, which they are due to present to the government by the end of the month. The carrier has been unprofitable since 2011 and has relied on state bailouts to stay afloat, most recently sourced from the Development Bank of Southern Africa.

By law, SAA is required to pay minimum retrenchment packages to employees whose contracts it terminates and the workers themselves can then seek further compensation from the UIF, to which they contribute a portion of their salary.

“They have no right to even approach the UIF,” Alf Lees, a DA lawmaker, said by phone. It “opens up a can of worms” where any company in trouble can approach the UIF for assistance.

The practitioners didn’t immediately respond to a request for comment.

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