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Is it the beginning of the end for SAA?

Government should have closed the airline five years ago, says Wits professor Jannie Rossouw.

NOMPU SIZIBA: South African Airways leadership briefed the parliament standing committee on public accounts, as it has to account for why it had failed to table its 2018/19 annual report. It indicated that the Auditor-General, Kimi Makwetu, had expressed reservations about whether it could continue to be recognised as a going concern, which meant it would make it very difficult for the airline to access the cash it needs from funders. A question has therefore been raised about whether SAA can afford its turnaround strategy, which includes the axing of some 944 personnel.

Read: SAA workers to go on strike from Friday – trade unions

SAA says strike could push airline towards collapse

In the meantime, the unions – among them Numsa – have threatened to bring SAA to an indefinite standstill come Friday [November 15] if their demands are not met. On this platform yesterday, SAA warned that such action could see the airline shut down for good. Unions are demanding wage increases of 8%, citing that airline pilots got an increase of 5.9% on a higher-based salary. And, of course, the unions are totally opposed to the proposed job losses.

To get some views on the latest developments I’m joined on the line by Professor Jannie Rossouw, the head of the School of Economic and Business Sciences at Wits University. Thanks very much, professor, for joining us. Apart from the job cuts that South African Airways are planning, what other issues are they are looking at to deal with in terms of their restructure process?

JANNIE ROSSOUW: In terms of the restructure process, SAA will have to look at its whole cost structure. And of course, one of the objections of the trade unions is that the executive of SAA has not been trimmed down. That might well be a valid argument – that the trimming should be all over the structure of SAA, and not only in the lower ranks.

NOMPU SIZIBA: Yes, indeed. To your mind, and based on what South African Airways had to say at the portfolio committee today [Wednesday, November 13], where they said that because the Auditor-General is not really certain whether he can describe them as a going concern, making it difficult for them [the airline] to get money externally to run their operations and do whatever else they need to do, do you get the feeling that it’s going to be very difficult for them to actually implement that turnaround strategy?

JANNIE ROSSOUW: Yes, indeed. It’s really a question of whether SAA is still a going concern. It’s shocking that their financial statements have still not been published, so it’s not possible for anybody to assess that question at the moment. But I know Solidarity has asked for billions to rescue SAA. I asked five years ago, and I’ve been asking all the time, that the government should simply give SAA away to anybody who wants it, because the government has really made a mess of it.

NOMPU SIZIBA: Let’s talk about more immediate matters. Things are getting quite hot now, with the unions coming out today at a press conference, saying that, come Friday, if their demands are not met – one of them being a wage increase of 8% – which of course must be very difficult for SAA, given their financial predicament, they will go on strike. And of course, on top of that, they completely object to those 944 job losses.

If they do that, and they say it’s going to be an indefinite strike, what’s your sense about what will happen to the airline?

JANNIE ROSSOUW: Probably the end of SAA. The airline will simply have to close and all the jobs at SAA will be gone. So there is no possibility of keeping SAA open as a business if the unions go on an indefinite strike. Effectively, unions will be closing SAA. And in the process, I must add, doing South African taxpayers a huge favour because SAA has been flying at the expense of the taxpayers for many years.

NOMPU SIZIBA: What moves can government make at this stage?

JANNIE ROSSOUW: Government can take the initiative and give SAA away. Government can decide to close SAA and just lay off all the staff. An 8% salary adjustment is in any case not justifiable in an environment with an inflation rate of 4.5%. So government can decide to do the right thing and just close SAA. It should have done that five years ago.

NOMPU SIZIBA: We’ll watch this space. Easier said than done, I’m sure. Thanks very much, professor.

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YES !! I personally am tired of the government using MY TAX MONEY to throw more cash down a black hole of losses and ineffectual management!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Come on Jannie get real. Cyril is a union man lacking a backbone so we know already that he will give the unions what they want and gouge us taxpayers to keep the airline afloat. Simple really.

The evidence is very clear The government, SAA, the NPA, and the CEO and board of SAA, not one of them have laid charges against any of those who were involved in state capture and those who used SAA as a feeding trough and as their gravy train, and those who have had their light fingers pilfer the money and assets of what until the mid 1990’s was a great and profitable SOE. It won many awards and accolades. So, the government, SAA, the NPA, and the CEO and board of SAA can now deal with an angry crew and angry staff. For the record, I support the crew in their endeavours to get the airline on course. Passengers should now treat SAA as an insecure form of air travel as the staff could go on strike at any time. Book and fly with other airlines until this dispute is resolved.

As much as I dislike unions, I don’t think all the blame is theirs. Dudu and her cadre boards over the last 10 years killed SAA effectively. The unions are just feeding off the leftover carcass. But nobody is talking about Dudu and co. while she is living the high life claiming poverty.

Agreed.

Close it give it away whatever.

Maybe also fire Pravin to start with. He has been meddling and the fact that the bloated workforce has been there for years is his fault now as he has done nothing to fix the problem. Seems he is the problem and adding to it.

SAA is symptomatic of the utter incompetence and corruption that has been a part of almost all SOEs run by greedy ANC ‘struggle heroes’. One only has to read about Dudu Myeni swanning around in her caftans, ordering people to do her bidding because of Zuma’s backing, to realise what harm has been done to a once-prosperous country. The time is now ripe for a showdown at the OK Corral. If CR pussyfoots around SAA, all the other corrupt SOE entities will continue their plundering of our taxes until South Africa is absolute junk. Time for action, Mr President.

I now think that the “struggle heroes” only struggle was to get their hands into state coffers and nothing else mattered.

That would have been the job of highly paid Jerana, the CEO who walked out when his hotline to Mboweni for more instant tax money to keep SAA going, to think and propose to the board.

Hopefully it is the “beginning of” the start of Comair’s share price recovery! 🙂

Solidarity is extremely fickle on this one; one minute they call for business rescue with threats of court action, the next minute one reads about last-minute midnight meetings between the union and Gordhan pleading for more time!
Is this all just a show to pull the wool over the tax payers’ eyes?
Or is Solidarity worried about a knock-on effect of one SOE folding and pulling the rest down with it?

Many of Solidarity’s members at Airways are blue-collar workers at SAA Technical and other support functions.

Solidarity also realises that if the SAA goes under as a business, their members have lost employment…hence to act (sort of) in the employers’ interest, is beneficial long-term. Symbiotic. Long-term thinking.

(..so the dog does not know if it should bite the hand that feeds it)

Other labour unions will have no sympathy for the employer’s case…and when employer closes down, then they only realise too late what they’ve contributed to. Short-term thinking.

Has taxpayers effectively been subsidising tourism by way off SAA? (Then a dedicated tourism tax rather than general taxes should have been bailing out SAA)

Surely if SAA sinks, airport taxes will rise to their true value and flight capacity will fall? So tourism will suffer a big punch.

Locally I think SAA and PRASA should have been bundled together to form a South African commuter company, this company should have then looked into alternative modes of commute (e.g. ferry systems,elevated railway lines etc) so as to diversify and reinvent itself. In this way there is ultimate accountability to commuters. The new entity should also have looked for synergies between themselves (e.g. rewards programs, engine maintenance etc.) and found techniques of fair price discrimination (e.g. CTC packages for white collar workers that included transport benefits, such transport packages would separate workers from ordinary workers, maintaining comfort and hygiene whilst allowing discounted group pricing).

In addition we needed to form a hub and spoke system of air travel to reduce competition with other African National Airlines. Each African Airline could then have a proportional share in the system. Such a system would ensure maximum capacity on planes. There are many other synergies and win-win opportunities that a publicly owned airline could have generated, but it seems the leadership was lacking…even with sadly to say Pravin.

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