A South African Labor Court has ruled that South African Airways must continue to operate, handing a victory to union who sued to halt the carrier’s shutdown.
South African Airways entered business rescue in December. Business rescue, by its very name, suggests rescue, not dissolution. But after stalled progress with union, mounting debt, COVID-19, and the refusal of the South African government to authorize even one rand of additional funding, South African Airways was declared dead.
Over the preceding days, unions have been in consultation with South African Airways over exit packages and how employees might be selected for a re-launched flag carrier. Concurrently, unions sued, arguing that the job cuts were an illegal way to circumvent hard-fought negotiations for equitable pay.
Agreeing with unions, Judge Andre van Niekerk held that South African must keep SAA’s nearly 5,000 workers employed.
“In the absence of a business rescue plan, the issuing of notices commencing a consultation process over proposed retrenchments is procedurally unfair.”
Specifically, van Niekerk said the primary issue was §136(1)b of the South Africa’s Companies Act, which allows for a state-owned enterprise to “retrench” (lay off) employees “only as part of a business rescue plan and on presentation of that plan or whether a retrenchment process may be initiated in the absence of a business rescue plan.”
Up to now, South African Airways has only floated the idea of a new airline, but presented no blueprint of how to establish one or how it will avoid many of the pitfalls that have made South African Airways unprofitable since 2011.
South African now says it will continue to operate cargo and repatriation in May “and beyond” and plans to “honour all existing commitments”.
South African Airways was supposed to have been liquidated by now. As I suggested nearly three weeks ago, don’t count on it…and I was correct. This latest court victory for unions may not buy much time, but it means that South African Airways continues…at least for now.