Unions accuse government of seeking to destroy South African Airways for the benefit of global capital

The Department of Public Enterprises, which had repeatedly assured the unions that the national airline will not be liquidated, came out in support of a so-called “business rescue plan” which will result in its effective liquidation

June 22, 2020 by Pavan Kulkarni
South African Airlines

South Africa’s Department of Public Enterprises (DPE) has been accused by unions of double-dealing, after it came out in support of the business rescue plan presented by the Business Rescue Practitioners (BRPs) of South African Airways (SAA). The National Union of Metalworkers of South African (NUMSA) and the South African Cabin Crew Association (SACCA) have criticized the DPE for supporting a plan which envisages the lay-off of 3,700 of the total 4,700 workers employed by SAA. The unions alleged in a statement on Thursday June 18, that the so-called ‘rescue’ plan presented by the BRPs in effect calls for the eventual liquidation of the national airlines.

The business rescue plan in no way addresses the “true cost drivers at SAA,” which had brought it to the verge of financial collapse, NUMSA’s national spokesperson Phakamile Hlubi-Majola told Peoples Dispatch.

The plan “does not outline the many years of corruption, looting and mismanagement which destroyed the airline. It does not outline the onerous contracts that are choking the airline,” Hlubi-Majola said, and that “[T]here were nine forensic reports that highlighted the fact that there was a lot of wasteful expenditure and a lot of corruption at SAA.”  

As per the unions, over-priced contracts have been handed over to private companies for services which SAA can undertake independently at much lower costs by insourcing workers. 

The statement by NUMSA and SACCA claims that these contracts brought the once “efficient and proud strategic asset” to the verge of liquidation, after which the airline had to be placed under business rescue in December 2019. 

However, by identifying such contracts and renegotiating or cancelling them, SAA can be restructured, NUMSA and SACCA maintain. The unions have proposed a plan as per which, the “restructured SAA will have the labour head count ramping up to 3200 within an 18 to 24-month period.”

In light of the extent of the crisis at SAA, the unions added, “we have always accepted that some workers may lose their jobs.” To manage unavoidable retrenchments, the statement says, “we called on DPE to.. put on the table a fair voluntary separation package targeting workers who are 50 years old and above, and we are amenable to this package being extended to younger workers who are keen to take up the same package.” 

Department of Public Enterprises misled unions about its real intentions

According to the unions, in previous meetings, the DPE had proposed to start SAA’s operations with 2,900 employees. This was following an order from the labor court instructing the BRPs to withdraw the retrenchment notices sent to the staff. These notices had been issued without even presenting a business rescue plan. 

As per the plan finally presented by the BRPs, almost the entire SAA staff is to be laid off and the assets of the state-owned enterprise will be sold to private entities in order to raise the finances to pay for the staff’s severance package. The unions claim that this does not qualify as a business rescue plan. 

In the meantime, the Public Enterprises Minister Pravin Gordhan – who heads the DPE which appointed Leslie Matuson and Siviwe Dongwana as the BRPs – also fell apart with them, and asserted that winding up the strategic national asset was not an option.

Further, casting aspersions about possible conflict of interests which the two BRPs may have in liquidating the airline, Gordhan had asked, “Who is waiting in the wings to pick up what pieces at what price?”

After all this public display that his department would not allow SAA to be liquidated, the unions were let in on a surprise two weeks ago during a meeting with Seabury Capital Group, which has been hired by the DPE as a consultant to work out a turnaround strategy for SAA.  

At this meeting, “they presented to us what the plan was for the airline. In their presentation they were explicit that their plan was.. to liquidate the airline. They said they had received that mandate from the DPE,” Hlubi-Majola said. However, the unions were yet again reassured by the DPE that the government was committed to saving the airline.

Finally, last week, the department did a volte-face and supported the plan of the BRPs to retain no more than 1,000 workers from the staff. This plan makes no mention of reviewing the contracts which have drained the finances of SAA.

For the benefit of global capital

Further, the “DPE has (also) taken the decision that SAA must only operate next year,” Hlubi-Majola said, arguing that this is evidence that the department’s real intention is to ensure that the airline is eventually liquidated.  

“[M]any commercial airlines are starting to operate. By the time SAA starts operating next year, its market share will have been eaten up by other multinational airlines,” she complained. 

“As we speak, [the US-based] Delta Air Lines is applying to take up some of the routes which SAA was flying between Johannesburg and Cape Town. So it is our view that SAA is being destroyed for the benefit of the global capital.”

Concealing this agenda, a popular narrative has been constructed by a coterie of pro-capital economists, and amplified by the mainstream media, that SAA is “an unjustified burden on the fiscus and taxpayers.”

As a result, “instead of demanding that SAA and all other State Owned Enterprises(SOEs) be returned to competent, honest and efficient management in the interests of the entire country,” the public opinion “has increasingly turned towards support for the closing down of SAA,” the unions stated.

Such an opinion “ignore(s) the role that SAA has been playing in creating competitive prices in the market by way of pushing the prices of other airlines down, and the vital strategic role SAA was playing in respect of tourism and other vital sectors in the South African economy.”

If SAA is allowed to be wound up in accordance with this misled opinion, “it must follow that all other SOEs, such as Eskom and PRASA and for that matter, most municipalities, should also be closed down.”

Under the circumstances where the unemployment rate, even before the lockdown, was already at an “alarmingly high” rate of almost 30%, such a closing down of SOEs, one after another, would “in essence mean that we as South Africans, and more particularly (as) workers, must simply accept the reality of a failed State with all the hardships that are to follow from that,” the unions maintain.  

“Nobody, should accept this, and we, as major unions at SAA, will most definitely not accept this,” NUMSA and SACCA have reiterated, adding that they are exploring the various legal actions they could take to stop such a disaster from unfolding.

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