SAA receives R1.3 billion from government to settle employee debt

The Department of Public Enterprises (DPE) has paid out R1.3 billion to South African Airways (SAA) to settle its severance packages with employees, as well as back paid owed.

The tranche forms part of the R10.5 billion bailout Finance Minister Tito Mboweni announced in October and was paid out last week.

A total R2.8 billion was also given to SAA’s business rescue practitioners (BRPs) in December 2019, according to SAA spokesperson Louise Brugman.

Brugman told The Citizen that the funding would be used to pay voluntary severance packages, which have been accepted and signed, and will also be used for employees who accepted the three months’ back pay deal and post commencement creditors.

“Since BRPs asked for R10.2 billion we are now owed some R7 billion from Department of Public Enterprises,” she said.

The DPE announced last year it will pay three months outstanding salaries for June, July and August to SAA employees, who have not been paid for nearly a year as the airline has been in business rescue since December 2019.

READ MORE: Is there still some hope for SAA?

The department confirmed that employees would be also receive 5.9% as part of the back pay, which would be paid  out as a lump sum and a 13th cheque, which will be paid to all employees excluding pilots.

An interim board of directors of the SAA was appointed early in December last year.

Former Industrial Development Corporation (IDC) chief executive Geoffrey Qhena is among six non-executive directors of the SAA board amid government’s plans to restructure the airline. The other directors include Peter Tshisevhe, June Crawford, Bembe Zwane, Professor Edna van Harte and Nick Fadugba.

SAA or Vaccines

There has been calls for government to prioritise spending on Covid-19 vaccines over SAA bailouts, as the country experiences a second wave of infections.

Wits Business School Professor Jannie Rossouw previously said government had lost its ability to borrow more money, however, selling SAA would get a lot of support from the citizens of the country.

“You can also ask why the private sector cannot also buy vaccines,” he said.

ALSO READ: Tax increase ‘not an option’ for Covid-19 vaccine funding

National Treasury director-general, Dondo Mogajane, recently indicated that government could fund the vaccines by raising taxes, borrowing more from the market or reprioritising government’s departmental budgets.

Meanwhile, 1.5 million doses of vaccines is expected to arrive in South Africa before the end of January. Government is expecting another 500,000 doses to be delivered in February.

Additional reporting from Ina Opperman.

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