The South African government said on Friday it would not be granting additional demands from South African Airways’ pilots. The Department of Public Enterprises (DPE) expressed concerns that the pilots were requesting much higher benefits than other employees. It even went so far as to call them “unreasonable and greedy.”
The South African Government is not happy with the SAA pilot union. Photo: South African Airways
SAAPA proposed changes to VSP
Earlier this week, the South African Department of Public Enterprises (DPE) announced that four unions, including the National Union of Metalworkers of South Africa and the South African Airways Cabin Crew Association, had finally agreed to a severance package structure. However, the South African Airways Pilots Association (SAAPA), remained opposed to the deal.
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On Friday, the DPE said that SAAPA had come around and was now endorsing the voluntary severance package (VSP). However, the pilot union was asking for benefits that went far beyond that of other employees at the carrier, which entered business administration in December last year.
“While the DPE appreciates the level of commitment and cooperation from the pilots, the DPE is concerned that pilots are seeking benefits, which are far more costly, more lucrative and financially rewarding for the pilots than any other class of employees at SAA,” the Department said in a statement seen by Simple Flying.
The DPE says the new demands are not in the best interest of anyone but the pilots. Photo: Getty Images
Details of demands
The package agreed upon between the administrators and the four unions would see the carrier’s 600 pilots, that make up 13% of the workforce, account for 45% of the payroll. Thus, they already receive nearly half of the R2.2 billion (about $1.3 million) budget proposed for the VSP.
The SAAPA wishes to amend the package to include the following:
Retrenching 1 548 employees and retaining 3 099 employees – 2 000 for the start-up of the new airline, 435 on a temporary layoff scheme, and 664 on furlough (furloughed employees are retrenched but can be called in as required).Reducing the number of retrenched employees from 3 647 to 1 548, excluding the 664 on furlough. This means the total cost of SAAPA’s proposal would be R1.986 billion against the budget of R2.2 billion that DPE had proposed to fund its proposal.Retained workers be kept on a part-time basis of 75% and be paid accordingly.Further cut in salaries of the pilots (20%) and employees 10%.Improved VSP to incentivize senior pilots.Provide opportunities to the younger and in particular, formerly disadvantaged pilots to advance their careers
The DPE said it did not believe these new requests to be in the best interest of anyone involved, apart from the pilots. It also stated that such a proposal would significantly damage economic recovery in the wake of the pandemic.
If the vote does not pass on Tuesday next week, SAA will enter liquidation. Photo: South African Airways
Will not accede to “greedy” demands
The Government wished to emphasize the severity of the situation for SAA, and did not mince words when expressing how it felt about the pilot union’s demands.
“What is important in this new reality is to avoid liquidation by getting the creditors to vote in favor of the business rescue plan and then starting the long and difficult journey to regain the lost market share in the domestic, regional and global market,” the DPE statement issued Friday read.
“Accordingly, the DPE has informed SAAPA that their proposals cannot be accepted nor will they accede to any further unreasonable and greedy demands from sections of union leadership for additional benefits,” it continued.
Potential liquidation decided next week
Creditors will be voting on the business rescue plan put forth by the SAA administrators on Tuesday, July 14th. A vote of 75% in favor will be required for it to pass. A vote against will result in the liquidation of the South African flag-carrier.
Do you believe the pilots’ union will agree to the package before the vote? Do you think that the vote will pass, or will SAA be liquidated? Let us know in the comments.