[imagesource: SAA]

Another day, another tale of taxpayer money being thrown at a problem that should have been done away with years ago.

As part of South African Airways’ (SAA) rescue plan, the airline’s workforce is set to be chopped from around 4 700 down to 1 000.

Those staff that lose their jobs will receive a severance package from the company, and it is the terms of those packages that has raised many eyebrows.

According to City Press, the airline is offering severance packages that average R580 000 a pop, which will total R2,2 billion should they be approved, and be paid for by the taxpayer.

Included in those severance packages are “retrospective increases and incentive bonuses”:

The offer comes at a time when companies which did business with SAA will be lucky if they see 7.5c on every rand that the bankrupt airline owes them. The debt amounts to about R11 billion in total and creditors may have to give up any hope of ever seeing the money they are owed…

Creditors were meant to vote on the plan on Thursday, but it was postponed after unions and creditors said the plan was deficient. They are expected to meet again on July 14.

That’s right – unions representing various SAA employees (Numsa, the SA Cabin Crew Association, and the SA Airways Pilots’ Association) said those packages weren’t generous enough.

Meanwhile, companies that did business with the airline are just supposed to take the bad debt on the chin, because those debts won’t be serviced.

You’re not the only one stunned at the nature of these severance packages, with Chris Jacobs, a labour expert and director of OIM International, saying they were “unaffordable and totally out of step” with what private sector employees could expect.

Back to the offer to SAA employees, with a letter sent to unions by acting director-general of public works Kgathatso Tlhakudi laying out how the packages would be calculated:

• A severance package equivalent to one week’s salary for every year of service;

• Salary for a notice month;

• A payout for any accumulated, untaken leave;

• A pro rata 13th cheque;

• Supplementary payment to bring the above amount up to R200 000 if it is less than this amount;

• Packages calculated on the basis of a salary increase of 5.9%, backdated to April 1 this year;

• Back pay due as a result of the 5.9% salary increase up to July 31; and,

• Incentives of R100 000 for employees whose total cost of employment is less than R450 000 per year, R75 000 for those who earn between R451 000 and R550 000 per year, and R50 000 for those who earn between R551 000 and R750 000.

A business that has gone broke multiple times, only to be bailed out by ordinary South Africans, is now dishing out 13th cheques amidst pleas for it to be liquidated.

The packages range from pilots being offered an average of R1,9 million each, through to cabin crew, cargo and operations personnel being offered around R350 000 each.

One insider said that “SAA’s cabin and operations crew are about 50% higher than the industry standard”, with SAA pilots earning around 2,4 times more than their peers.

Sheesh, I wonder where it all went wrong for the official national airline?

Read the full City Press report here.

[source:citypress]