Management at SAA Technical (SAAT) is continuing with efforts to try to pay employees at least 50% of their salaries due for March, but at this stage, is still waiting for details of "anticipated funding" from its shareholder, the Department of Public Enterprises (DPE).
This is according to a letter to SAAT employees dated 18 March and seen by Fin24.
Unlike its parent company, South African Airways (SAA), SAAT is not in business rescue. Its operations, therefore, fall outside the domain of SAA's rescue practitioners.
In the letter, SAAT interim CEO Terrance Naidoo informs employees that the company and its employees continue to face "unprecedented times that do not only ask of us to work as one, but also to maintain resilience and courage to overcome them".
"SAAT continues with the recoveries of outstanding payments from our customers for the services rendered to them by us. As part of our recovery efforts, the company has put affected customers on terms to have monies owed to SAAT paid. Funding available to SAAT at this stage is limited, and the exco [executive committee] continues to recover more payments to SAAT in order to meet 50% payment of salaries, as a minimum," states the letter.
"Exco is aware of the individual letters of relief issued to employees stating that it was anticipated that the much-needed funding of SAAT operations from our shareholder would be processed before the end of March 2021, so employees can also be able to pay their creditors. Exco takes full ownership of the contents of such letters as it was based on our considered view and information available to exco at the time."
The letter states that engagements with the SAA board and shareholders are ongoing.
"At this stage, details around the anticipated funding are still awaited. It has come to our attention that there are views that SAAT management prioritise payment to service providers at the expense of employees, and this is definitely not the case. As you may be aware, payments or contributions to pension funds, SARS and other service providers remain outstanding where SAAT made deferred payment arrangements with affected parties."
The letter also states that SAAT have no choice but to continue purchasing requisite spares in order to enable continued operations. It is out of such operations that it can generate much-needed revenue, though limited at this stage.
'Not looking good'
Previously, before the latest letter dated 18 March, it was indicated to SAAT employees that they might get only 25% of their salaries this month.
Derek Mans , organiser for aviation and defence at union Solidarity, said on Wednesday that reduced payment is regardless of employees having worked full roster schedules. In February, only about 50% of salary amounts were paid.
"SAAT employees have basically become creditors of the company. Should something happen to SAAT and it goes into business rescue, provisional liquidation or liquidation, employees can be regarded as creditors. This is because the rest of their salaries are owed from before any such proceedings might be activated," explained Mans.
Due to pension fund contributions for employees of SAAT not having been paid since September 2020, one of the funds is seemingly considering liquidating, according to Mans.
He pointed out that it is a criminal offence not to pay pension fund contributions unless an agreement in that regard has been reached.
"Last year we went to court on a similar situation at Denel, and the court found the company liable to pay such contributions," said Mans.
The salaries outstanding from September to December 2020 amount to about R159-million and that number is still growing.
"It is not looking good at SAAT. Our efforts to secure a meeting with the board were not successful. We have secured a meeting with the DPE," said Mans.
Solidarity's legal team is considering taking legal action against SAAT similar to the recent action undertook against Denel due to the outstanding salaries. In tha...