South Africa: Strike Could Destroy SAA and All Its Jobs - Exec

A queue of frustrated passengers at the Port Elizabeth airport on November 15, 2019, after SAA cancelled flights.
12 November 2019

Any industrial action will endanger the existence of South African Airways (SAA), and could destroy every job at the state-owned airline as well as related industries.

This was the message from Deon Fredericks, interim chief financial officer (CFO) of SAA, at a media briefing on Tuesday afternoon.

"We need to address the sustained loss-making position of the past years and note with concern the union threats of industrial action," said Fredericks. "But by working together we can obtain the objectives of our turn-around strategy."

SAA announced on Monday that it is embarking on a restructuring process which may affect 944 jobs - almost a fifth of its employees. The restructuring excludes SAA subsidiaries SAA Technical, Mango Airlines and Air Chefs.

In a joint statement issued on Tuesday, the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (SACCA) condemned SAA for informing the workers of retrenchments "via the media". According to Fredericks there was a meeting, but the unions did not attend.

The unions - and potentially also the SAA Pilots Association - are threatening industrial action.

"In the meantime, we will be preparing workers for the mother of all strikes at SAA (and) all its operations nationally. We have already received a strike certificate and we have concluded the balloting process," Numsa and SACCA say in their joint statement.

Fredericks explained that there are currently two separate processes going on at the airline. He emphasised that both are necessary in the context of the serious challenges faced by the airline.

The one process is that of restructuring the airline and the other is a wage negotiation process. Numsa and SACCA are demanding an increase of 8% for its members.

Fredericks said labour currently represents 24% of SAA's total cost. Together with fuel, it accounts for more than 50% of the airline's costs.

"SAA is not competitive. We need the right people in the right positions," said Fredericks.

Deadline looming

Fin24 understands that SAA is currently under pressure to secure R2bn in working capital, which it needs before November 20th, which is adding impetus to the restructuring.

Government does not want to extend further support. Finance minister Tito Mboweni announced last month that Treasury won't extend additional bailouts to state-owned enterprises - any further financing will be in the form of loans, that will have to be repaid, with interest.

Over the past 13 years, the flag carrier has incurred over R28bn in cumulative losses.

Numsa national spokesperson Phakamile Hlubi-Majoza told Fin24 on Tuesday that SAA has been aware for some time of the deadline to obtain R2bn.

In her view, there are ways the airline can obtain this money.

"They have not lifted a finger to recover money from those who have been implicated of corruption at the airline. A lot of money was lost because of looting and there have been forensic reports implicating certain people. The airline must go after them for money long before they come and ask labour to make sacrifices," said Hlubi-Majoza.

At the briefing on Tuesday, Fredericks said various investigations have taken place, but that internally, the airline could only fire people or have them resign. He said a number of cases have been handed over to the Hawks and the National Prosecuting Authority.

Wage dispute

Asked about why Numsa wants an 8% increase when pilots are only receiving a 5.9% increase, Hlubi-Majola said the union's demand is reasonable, given that pilots already have generous salaries and benefits at international rates.

"The situation in which we find ourselves is that we are fighting for survival and our revenue is under pressure. The company is very sick and we need to nurse it back. There is a significant risk," Fredericks said.

"Our objective is to secure the future of our national airline, for it to be sustainable and have a commercial future."

Source: Fin24

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