Financial damage is diminishing as services are gradually being restored. From Moneyweb.
SAA has resumed flights to its eight international and six regional destinations, as the impact of the pay-related strike launched last week appears to have been contained.
At a press conference at Airways Park near OR Tambo Airport yesterday, airline executives outlined the progress made in resuming services since the strike commenced on Friday last week. Roughly 200 of the 1 000 striking workers returned to work in the last few days. This strike was costing the airline about R50 million a day, but the financial damage has diminished as services are gradually being restored.
SAA’s Acting General Manager for Human Resources Martin Kemp said roughly one-fifth of the 5 000 airline employees had gone on strike. That number reduced as the airline adopted a ‘no work no pay’ approach to strikers.
This is a high stakes gamble for both sides in the dispute. A drawn-out strike could sink the airline, which has accumulated losses of R28 billion over the last 13 years, and this would put thousands of employees out of work.
Public Enterprises Minister Pravin Gordhan said yesterday there will be no more bailouts for the airline, which has received R20.5 billion in fiscal support in the last three years. A successful and quick resolution of the strike is vital for the financial stabilisation of the company, according to Interim CFO Deon Fredericks.
A representative of the Commission for Conciliation, Mediation and Arbitration (CCMA) has been parachuted in to assist in negotiations with the trade unions which, in addition to demanding an 8% pay increase, have introduced new demands in recent days relating to the restructuring of the airline and the in-sourcing of services currently supplied by contractors. The airline’s opening pay offer to workers was 0%, but has since increased to 5.9%, effective from March 2020.
The airline says it will approach the Labour Court to prevent the striking trade unions – the National Union of Metalworkers (Numsa) and the South African Cabin Crew Association (Sacca) – from introducing new demands. as these were not part of the initial dispute.
Acting CEO Zuks Ramasia said statements by the trade unions questioning safety standards at the airline “are deeply regrettable, untruthful and without foundation. In response, SAA is taking appropriate legal action for these statements to be retracted.”
Captain Mpho Mamashela, acting chief pilot and fleet captain, said safety standards at the airline are given the highest priority, with pilots averaging 17 to 20 years’ experience in the cockpit.
Fredericks said if the airline were to accede to the unions’ 8% wage demands this would cost an additional R240 million over the next three years. “This not something we can afford.”
“The most critical time in the turnaround of the airline is in the next two years. We’re open to negotiation (on pay increases) on longer time frames.”
Ramasia called on striking employees to return to work. “After all, our customers contribute to our salaries and it is only through their confidence and custom that we can secure the future for SAA and ensure our essential contribution to the country’s economy.”
The strike comes at a time when the airline is attempting to negotiate a R2-billion lifeline, guaranteed by National Treasury, from a consortium of banks to cover working capital requirements over the coming months. Fredericks says the airline’s debt currently stands at R9.2 billion, soon to be augmented by the R2 billion working capital loan.
The airline has also saved R600 million by overhauling its procurement. Most of this was achieved by cutting out middlemen and cancelling less vital contracts.
Further savings are expected by almost halving the time it takes to service a plane in SAA’s Technical division to 35 days.
SAA’s ageing fleet is getting an injection of four Airbus A350s, which should save R140 million a year per plane on long-haul flights.
Strike contingency plans have been in place to re-accommodate up to 11 000 daily passengers on alternative and partner airlines, such as Mango, Airlink and SA Express.
SAA chairperson Thandeka Mgoduso says the board has the support of the government in the “tough choices” that have to be made to return the airline to profitability.
Fredericks says talk of introducing an equity partner to the airline could only be considered when the airline returns to financial stability.