Government Grants SAA R5bn For Severance Payments

The government committed to providing R10.5 billion to bail out the airline in October’s mid-term budget.

Government Grants SAA R5bn For Severance Payments-SurgeZirc SA
SAA flight/Photo File: TSA

South African Airways (SAA) has received a further R5 billion from the Department of Public Enterprises to help make severance payments to laid-off staff as part of its rescue plan, administrators of the plan said on Tuesday.

SAA entered a local form of bankruptcy protection in December 2019 after roughly a decade of financial losses, with its fortunes worsening after the Covid-19 pandemic grounded flights.

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The government committed to providing R10.5 billion to bail out the airline in October’s mid-term budget. The business rescue practitioners (BRP) hired to restructure the airline said they had received R7.8 billion from the government including the latest payment.

The administrators, who have proposed a plan which includes reducing the airline’s staff by around two-thirds, said the money allowed them to pay cabin crew and ground staff that had accepted voluntary severance packages in August.

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More than 3,000 SAA employees have accepted severance packages, while 1,300 are still in negotiations, the administrators said. “The payment (to staff) follows the receipt of a further tranche of R5 billion from the Department of Public Enterprises on 12 February, which has further allowed the BRPs to confirm the second payment on 19 February.”

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