Business Maverick

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Unpaid SA Express workers told to fend for themselves as airline nears liquidation

Unpaid SA Express workers told to fend for themselves as airline nears liquidation
The logo of South African Airways Express is seen on an Bombardier Dash 8 Q400 airplane at OR Tambo international airport in Johannesburg, South Africa on 08 November 2015. EPA/MIKKO PIHAVAARA

Three SA Express workers said the only payment that workers received in April was a maximum of R7,000 from a special Covid-19 temporary employee relief scheme. But full March and April salaries are still outstanding.

Workers at SA Express have been left further in the dark about the payment of their outstanding March and April salaries as the troubled state-owned airline is nearing the permanent closure of its operations after 26 years in the sky.

A day after the High Court in Johannesburg placed SA Express under provisional liquidation on 28 April, the airline’s acting CEO, Thuli Mpshe, told 691 workers in a letter that there is no clear plan to pay outstanding salaries.

“To date, the company [SA Express] has not been able to pay salaries for March and April 2020 respectively, with no clear visibility of when this will be paid,” Mpshe said in the letter to workers, which was obtained by Business Maverick.

In other words, SA Express workers have been told to fend for themselves at a time when many workers have complained about not being able to afford food in their households or medical care during a Covid-19 crisis.  

Mpshe also told workers that SA Express management is trying to “rectify the problem under very trying circumstances”, without elaborating on specific plans to remedy the problem of outstanding salaries.

The business rescue practitioners of SA Express, Phahlani Mkhombo and Daniel Terblanche, applied to the High Court in Johannesburg for the provisional liquidation of the airline because it had run out of money. Since SA Express was placed under business rescue on 6 February following a successful court application by the airline’s creditor, the Department of Public Enterprises (DPE) has rejected several funding requests by Mkhombo and Terblanche of up to R691-million in the form of a government guarantee. DPE is the sole shareholder of SA Express and oversees its operations.

The government guarantee would allow the rescue practitioners to solicit more funding from commercial banks to fund the operations of SA Express, including the net monthly salary bill of R22-million (after the payment of statutory obligations such as pension contributions, medical aid, and income tax). The gross salary bill (before statutory payments are paid) is R30-million.

Without the funding or government guarantee, SA Express is in sight of its final resting place.

For now, the SA Express business rescue proceedings have been discontinued and the airline is in provisional liquidation. This means that affected SA Express parties – creditors, workers, trade unions and others – have until 9 June to put forward their reasons or show good cause why the court should not order the final liquidation of the airline, which would result in the permanent closure of the airline and 691 job losses.

Asked for comment about the provisional liquidation, the DPE, which has diverted its attention to another troubled state-owned airline, SAA, and neglected SA Express in the process said: “[The] government is reviewing its options in all airline assets. We will inform the public of further developments in due course.”

R7,000 UIF payment

Three SA Express workers told Business Maverick at the weekend that the only payment that workers had received in April was a maximum of R7,000 from a special Covid-19 temporary employee relief scheme that was recently put in place by the Unemployment Insurance Fund (UIF).

The UIF special Covid-19 scheme only assists financially distressed companies to deal with the impact of Covid-19. The DPE applied to the UIF – on behalf of the airline – for emergency financial assistance with March and April salary payments. 

However, a senior SA Express manager said the UIF had only awarded the airline R4.6-million, which was paid out to workers in April. Meanwhile, the monthly salary bill is R22-million.

The UIF rejected the DPE’s request for assistance with outstanding March salaries because benefits under the special Covid-19 scheme are only effective from 1 April and employers were expected to have already covered March salaries, the manager said. It’s unclear if SA Express workers will get UIF benefits beyond April.

Even with the R7,000 awarded to workers, a large portion of their salary is still outstanding. The UIF’s benefits usually result in workers receiving just less than half of their salary with the employer requested to top-up the shortfall. But SA Express is bankrupt and cannot afford to pay the shortfall. BM

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