South African Airways Union Discussing Winding Down The Carrier

South African Airways Unions Discussing Winding Down The Carrier
South African Airways Nears Collapse With Plan To Lay-Off All Staff Photo: Getty

South African Airways has failed to reach an agreement with government that could save the flag carrier from being collapsed.

The government told that it wouldn't provide any type of additional funds, lending guarantees or allow foreign financing of a business rescue plan.

The state-owned carrier has planned to lay-off all of its 4,700 strong workforce, after the government said it wouldn't provide more funds for rescue efforts.

In a statement, South American Airlines said:

"It is unlikely that the company will be successfully rescued as a result of the business rescue process. In order to make payment of the severance packages, the company is required to sell and dispose of its assets." 

These assets also include some valuable slots in major airports, including two night slots at London Heathrow Airport.

South African Airways Unions Discussing Winding Down The Carrier
SAA might be forced to sell its Heathrow slots Photo: SAA

Few days ago, South African Airlines put forward a proposal to trade unions but it hasn't been agreed. This is the latest sign that the flag carrier is on the blink of collapse.

According to Bloomberg, all the employees will leave the company in as little as 12 days. The flag carrier will seek to offer severance deals to their employees.

South African Airways said that employees' contracts would be terminated on 30th April in an internal airline statement, as seen by Reuters.

After that, the employees will be paid one week's pay for every year of service, one month's pay in lieu of notice pay. They will also be paid for outstanding annual leave.

South African Airways Unions Discussing Winding Down The Carrier
The employees will be paid on different basis Photo: SAS

The proposal shared among the employees stated that:

"The company will make payment of the severance packages to employees on a monthly basis, over a period of six months, once the sale of assets [has] been concluded."

The state-owned carrier entered a form of bankruptcy protection back in December. Then after, the carrier suspended all commercial passenger flights due to the global coronavirus pandemic.

South African Finance Minister, Tito Mboweni, has said that the flag carriers' collapse could help to balance out the country's finances.

Two unions have confirmed that the proposal had been made and discussions are going on among their members.

South African Airways Unions Discussing Winding Down The Carrier
SAS has suspended all flights since December Photo: From Web

Although, the talks were originally about job cuts of all the employees, one of the unions involved said that they has developed into a discussion about winding down the airline.

South African Airways has not been profitable since 2011 and has received more than 20 billion rand ($1.1 billion) in government bailouts in the last three years.

The future of South Africa's air travel remains unknown, with no current airline having the capacity to replace the 86 years old large state-owned carrier.

The state owned carrier operates an All-Airbus passenger fleet of 17 A320s, 11 A330s, 11 A340s and recently introduced 4 A350s. 

However, the airlines operates Boeing 737 aircraft for its cargo operation. The carrier operates a fleet of 39 aircraft.

South African Airways Unions Discussing Winding Down The Carrier
SAS recently took delivery of its first Airbus A350 Photo: SAS

How do you feel about this need? Which airline could replace South African Airways? Feel free to share in the comments below: