SAAF maintenance contract cancellation costing jobs at Denel

More than 500 maintenance specialists at Denel Aviation will be out of work following the South African Air Force’s (SAAF’s) cancellation of a maintenance contract with the company, which lapses on March 31, 2013.

Trade union Solidarity yesterday received a written retrenchment notice confirming the possibility that up to approximately 523 aircraft specialists at Denel Aviation/AMG (Aero Manpower Group) would be retrenched because of the South African Air Force’s (SAAF’s) cancellation of its contract for aircraft maintenance with the company. The first consultation on the retrenchments will take place on 14 January 2013.

According to Jack Loggenberg, Solidarity’s spokesperson, this announcement is extremely bad news for the 523 Denel employees who will be affected by the planned retrenchments. “This news could hardly have come at a worse time. These employees are stationed at various squadrons all over the country. They will probably not only lose their jobs, but also their air force housing within a matter of months,” said Loggenberg.

The Department of Defence gave notice on 20 June 2011 that it was going to cancel its contract for aircraft maintenance with Denel Aviation/AMG. Negotiations were held to amend and possibly review the contract, but last month the air force unexpectedly disclosed in a letter that it had reviewed its decision and would not be going ahead with the new contract with Denel Aviation/AMG after 31 March 2013.

“The SAAF has informed DPS [the Denel Personnel Solutions (DPS) division of Denel Aviation, under which AMG falls] that the existing contract will come to an end at the termination date [March 31, 2013],” Denel said in a statement on Thursday. “Because DPS has no contract or order cover beyond this date the company has no other option but to consider retrenchment for the entire DPS/AMG workforce. However, Denel is currently considering alternatives to retrenchments for the 538 affected DPS/AMG employees, including all possibilities for alternative employment. Denel has initiated the requisite consultation process with the representative unions.”

Loggenberg said there was still no clarity on the dispute between Denel Aviation/AMG and the air force regarding who would be responsible for paying the severance packages worth millions of rands of the employees who would be retrenched. “According to the contract the air force will be responsible for paying out severance packages should retrenchments arise out of its contract with Denel Aviation/AMG. However, there is uncertainty over whether or not the air force will be responsible for paying out severance packages after the contract has expired. Denel Aviation/AMG maintains that the air force will still be responsible for paying the severance packages. We are concerned that if Denel Aviation/AMG were to pay the severance packages, more retrenchments would follow at the company. Denel has just gone through a process of restructuring.”

Denel has provided maintenance personnel to the SAAF under the AMG contract since 1986. “Denel will continue to negotiate with the SAAF to determine whether alternative solutions for the future of the contract can be found,” the company said. “Denel is still hopeful and believes that it will find an amicable solution through our ongoing discussions with the SAAF and the SANDF.”

Denel’s contract with the SAAF was lost after the 2011 auditor-general’s report found it was irregular and in conflict with the Public Finance Management Act and Treasury prescripts, Business Day reported. The contract has been renewed without an open tender.

Source: defenceWeb