Court blocks planned layoffs at struggling South African Airways

FILE PHOTO: Passengers board a South African Airways plane at the Port Elizabeth International Airport in the Eastern Cape province, South Africa, September 30, 2018. /Reuters

A South African court has blocked planned layoff at the state-owned airline whose woes deepened due to the COVID-19 pandemic.

The Labour Court on Friday ordered a halt to the plan by South African Airways (SAA), siding with two trade unions who had argued that the airline’s administrators had acted unfairly.

The world’s aviation industry is one of the hardest hit sectors by the COVID-19 pandemic, with many airlines forced to halt passenger operations.

Even before the pandemic however, SAA had been fighting for its survival since entering a form of bankruptcy protection in December, with the government declining to provide further funding.

The administrators have until the end of the month to draft a rescue plan for SAA but have told creditors that a wind-down or liquidation are likely outcomes.

Public Enterprises Minister Pravin Gordhan said on Wednesday that the government wanted to avoid SAA being liquidated and preferred to see it restructured into a new airline.

The administrators started consultations with unions in March about layoffs, but two unions – the National Union of Metalworkers of South Africa (NUMSA) and the South African Cabin Crew Association (SACCA) – said those consultations should wait until the administrators had presented a business rescue plan.

The Labour Court in its ruling said the layoff notices were “procedurally unfair” without the rescue plan having been published and ordering the administrators to withdraw the notices.

SAA has not made a profit since 2011 and has received bailouts worth more than 20 billion rand ($1.1 billion) over the past three years, a major drain on public resources alongside struggling state utility Eskom at a time of weak economic growth.