SAA’s restructuring, job losses a result of numerous challenges

Wednesday, November 13, 2019

South African Airways (SAA) has informed all its 5146 employees that it is embarking on a restructuring process which may lead to job losses.

Acting Chief Executive Officer, Zuks Ramasia, said although the process may lead to retrenchments, SAA hopes to minimise the impact while offering support to those who would be directly affected.

SAA has faced numerous challenges over the past few years culminating in the current situation. 

The challenges include, funding and liquidity challenges;  inability to borrow indefinitely without repaying debt; high interest costs on loans; volatile and fluctuating fuel price;  currency volatility;  insufficient revenue and cash generation in relation to operating cost; ageing fleet which is expensive to maintain and is fuel inefficient, making it difficult for SAA to compete in the market place; and aggressive international and regional competition for revenue stimulation and network optimisation.

“In addition, SAA’s balance sheet has historically been weak and remains so despite recent substantial capital injections from the government. Our continued losses and reliance on government guarantees to borrow money from lenders, have increased the interest costs which impacts the operating cost of the business.

“We urgently need to address the on-going lossmaking position that has subsisted over the past years. 

“That is why we are undergoing a restructuring process that seeks to ensure effective implementation of the accelerated Long Term Turnaround Strategy amidst the present prevailing operational challenges,” said Ramasia.

The scope of the restructuring encompasses all SAA divisions and departments but excludes the subsidiaries SAAT, Mango Airlines and Air Chefs.

Ramasia said as at 1 November 2019, SAA had a total workforce of 5 149 globally. 

“It is difficult to estimate the number of employees who may eventually be impacted. No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected,” she said.

Deon Fredericks, SAA Interim Chief Financial Officer, said in a statement that while the National Union of Metalworkers of South Africa (NUMSA) and the South African Airways Cabin Crew Association (SACCA) claim they have not been consulted about the restructuring process, this is not correct.

On 11 November, SAA issued a written notice to the unions in line with the LRA. This was done after SAA scheduled a meeting with the unions on the same day. However, the recognised unions did not attend.

“There were nine meetings on wage negotiations since February. In the latter part of the negotiations, SAA leadership made presentations to the unions regarding the liquidity status, financial performance and progress on the Long-term Turnaround Strategy (LTTS).

“We have clearly indicated SAA’s difficult financial situation, even though we have made progress with the implementation of the Long-term Turnaround Strategy. 

“It is our hope that our unions will grasp the full extent of the situation and engage with us in finding a constructive way going forward,” said Fredericks.

He said they had noted with concern the threat by the unions to consider initiating industrial action.

“Let me state the reality clearly; any interruption to our operation, endangers the future of our airline; our ability to deliver our strategy and threatens every job at SAA and related industries.

“We are confident that by working together we can meet the objectives of the strategy. Now is the time for us to unite however difficult the decisions are for us as we move forward. Our shared responsibility is great and we can secure a bright future, not only for SAA but also for the country.” –