Administrators trying save South African Airways – SAA say they will appeal a court ruling that ordered them to stop a planned layoff process.
State-owned SAA has been fighting for its survival since entering a form of bankruptcy protection called “business rescue” in December. Its fortunes deteriorated with the coronavirus pandemic forcing it to halt all commercial passenger flights during which time, the government reneged on its earlier agreement of a bail out.
The Labour Court’s decision to agree with two trade unions in its judgment on Friday has dealt a major blow to the administrators as they have said that layoffs are necessary to avoid the airline being liquidated.
The court ruled that it was “procedurally unfair” for administrators Dongwana and Les Matuson to issue notices to workers about consultations on layoffs without having first presented a business rescue plan.
Rescue experts say the case has huge implications for future attempts to save troubled businesses.
Dongwana and Matuson have until the end of the month to draft a rescue plan for SAA, which has not made a profit since 2011 and has received bailouts worth more than 20 billion rand or $1.1 billion for over the past three years.
Public Enterprises Minister, Pravin Gordhan wants SAA to be restructured into a new airline and has asked unions to share their views on how that might be achieved.
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