ENCA reported that the proposal, detailed in a document seen by them, gives employees until 24 April to accept the agreement. This proposal comes shortly after Public Enterprises Minister Pravin Gordhan rejected the business rescue practitioners’ request for a further R10 billion for funding.

The state-owned airline has offered severance deals to all staff from the end of this month after administrators concluded that a successful turnaround is now unlikely, according to a proposal to eight labour groups seen by Bloomberg News.

The basic value of compensation will be one-month pay per year of service and will depend on the successful disposal of assets such as real estate, according to the document. SAA has relied on bailouts and state-guaranteed debt agreements for years, having last made a profit in 2011, and was put into a form of bankruptcy protection in December.

Public Enterprises Minister Pravin Gordhan said earlier this week that the cost of staving off the COVID-19 pandemic in the country meant no more cash could be extended, while Finance Minister Tito Mboweni said the carrier’s closure could help shore up state finances. The coronavirus may prove the final nail in the coffin for SAA, which was reducing routes and considering job cuts even before the outbreak forced airlines around the world to ground planes.

The business rescue practitioners said the airline cannot be turned around or saved without additional funding. The airline was already in a dismal financial state before the COVID-19 crisis hit, with the current travel restrictions seen by many as the final nail in the coffin. On 20 March SAA suspended all regional and international operations until 31 May in response to the COVID-19 outbreak and travel ban.

Without generating revenue, SAA is not able to operate or pay employees as it has no significant cash reserves. ENCA said the proposal states that SAA’s assets will have to be sold, and the value of these assets will determine the packages which the retrenched workers will get.

The industry could lose $314 billion in ticket sales this year, according to the International Air Transport Association, as lockdowns and travel bans take an increasingly heavy toll on the global economy. SAA has been flying cargo planes and chartered flights to countries such as Germany and Brazil in recent weeks, but no commercial passenger services. The plan to offer severance packages to all staff was first reported by News24 website.

Mismanagement and corruption at the embattled airline saw it rack up billions in debt in recent years. South African Airways, which began operations in 1934, has recorded R26 billion in losses over the last six years and has depended on a series of state bailouts to keep operating.

Aviation specialist Phuthego Mojapele told ENCA this is the end of the road for South African Airways. He said SAA has been on its death bed for some time, and even the billions pumped into the airline could not resuscitate it. “We have reached the end of it. SAA does not have assets to justify its continued existence,” he said.

Phuthego Mojapele said he cannot see how SAA can continue to operate, especially with the coronavirus pandemic which is ravaging the airline industry. Looking at the SAA assets which could be sold to pay for retrenchment packages, Mojapele said valuable assets are hard to find. The planes which SAA own are obsolete, and SAA Express is likely to be sold for “next to nothing”, he said.