Business

Loss-making SAA eyes cutting 900 jobs in restructuring

2019-11-12 11:21

South Africa's struggling state-owned airline South African Airways could cut more than 900 jobs as it restructures to stem severe financial losses, the airline said.

SAA said it had started consultations with its more than 5 000 staff and was talking to labour unions.

The airline has not made an annual profit since 2011 and is grappling with severe funding difficulties and an inefficient and ageing fleet of airplanes.

South African officials have been searching for an investor to take a stake in the airline, but their efforts have so far been unsuccessful.

“We urgently need to address the ongoing loss-making position that has subsisted over the past years. That is why we are undergoing a restructuring,” said SAA’s acting chief executive Zuks Ramasia.

“No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected.”

In a dramatic fall from grace over the past decade, SAA has lost its place as Africa's biggest airline and a symbol of patriotic pride to become a source of frustration for taxpayers.

Analysts have long said its workforce should be cut to bring it in line with regional competitors.

The DA’s Natasha Mazzone was scathing about the state of the airline, and called on Minister of Public Enterprises Pravin Gordhan to place it under business rescue.

“It is unfortunate that so many SAA employees now face imminent job cuts,” she said, adding that ordinary workers are forced to bear the brunt and those “who destroyed the national carrier have gotten off scot free”.

Mazzone believed that only partial or full privatisation could prevent any more negative impact on South Africa’s constrained fiscus and would provide much-needed job security to SAA employees.

“No business in the world can have job security without business certainty. As things currently stand there is absolutely no certainty at SAA and only business rescue can bring this about.”

In September, City Press reported how a last-minute intervention by Gordhan put the brakes on a court application to place SAA under business rescue.

Read: Gordhan saves SAA from rescue

Gordhan met with trade union Solidarity to request that the union halt its intended court application to place SAA under business rescue.

It appears that Gordhan and the union agreed to come up with a plan to keep the national carrier flying high rather than grounded.

Solidarity announced as early as April last year that it would bring an application for business rescue – because SAA was “technically insolvent” and because Solidarity qualifies as an affected party in terms of the Companies Act, meaning it can bring such an application. '

- Additional reporting by Reurters


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December 8 2019