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SA ready to make tough SAA decisions, says Gordhan

Airline is ‘not too big to fail’ he tells conference in New York.

The South African government has signalled that it is going to take a hardline approach to its cash-strapped national airline as labour unions prepare to strike over pay and job cuts, forcing the carrier to cancel almost all its flights over the next two days.

“If some tough decisions need to be made, we’ll make them,” Public Enterprises Minister Pravin Gordhan said in a speech at a conference in New York Thursday. South African Airways (SAA) is “not too big to fail”.

Two unions representing more than 3 000 staff at SAA have said they’ll go on strike Friday to protest the carrier’s failure to meet their pay demands and plans to fire 944 employees.

The two sides held last-minute talks on Thursday in an effort to make a deal, but the labour groups rejected an offer and the walkout will go ahead.

The government will repay loss-making SAA’s outstanding government-guaranteed debt of R9.2 billion ($620 million) over the next three years, the National Treasury said in the medium-term budget policy statement in October. Lenders are demanding a firm repayment plan as a condition for agreeing to extend more funding, SAA has said.

Read: SAA cancels flights as employees plan strike over wages

SAA on collision course with trade unions in a fight for survival

The airline, which has lost more than R28 billion over the past 13 years and relies on financial support from the government to remain solvent, says it has no option other than to restructure or place the entire business at risk. The unions counter that their members shouldn’t have to pay the price of years of mismanagement and misappropriation of the airline’s funds, and that alternative solutions need to be sought. South Africa’s jobless rate is more than 29%, the highest in at least 11 years.

The state is talking with potential investors in the airline to ease the continuing burden the company puts on the national budget. “I am pleased to learn that there are conversations involving South African Airways and potential equity partners, which would liberate the fiscus from this SAA Sword of Damocles,” Finance Minister Tito Mboweni said last month.

Some of the unions are politically motivated, Gordhan said.

“They’re risking the future of the airline and the jobs of everybody else. So hopefully they come to their senses before we go too far.”

© 2019 Bloomberg LP

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Talk is cheap, somehow I’m not getting my popcorn ready as yet.

This man has had some sort of involvement with all SOE’s for years now.

He is part of the failure and should go.

He is forever talking as though he knows exactly what is wrong and he knows exactly how to fix it.

He does not and it is just going from bad to worse.

Couldnt agree more. Jamnadas is part of the problem with SOEs. He is 70 years old, an ex member of the SACP, was the Zupta finance director for years and has a track record of under delivery. The famous state guarantee is his invention, he destroyed the CEO of Eskom and thinks like a low end shop steward. Replace him with a businessman-and the SOEs could have some hope then

“…Some of the unions are politically motivated, Gordhan said….”

Mystic Pravin, at his insightful best.

“If some tough decisions need to be made, we’ll make them” & “…Some of the unions are politically motivated, Gordhan said….”

When I read this; I know he is talking as a politician; therefore I ignore this article.

At please Gordhan, your commie unions and their votes are the only reason the anc exists!….phht

Your entire troika and axis of evil is on the way out…. either your union buddies will pull the trigger or moody will trash your economic madness….alternatively, the citizens and taxpayers will show you and your thieving cabal the door!

“…Some of the unions are politically motivated, Gordhan said….”

Mystic Pravin, at his insightful best.

Yes. The hard decision is whether to give an increase of 8% or 15%

The really hard decision of whether to cut the bloated payroll has already been taken. No cuts

SAA lost about R180 million taxpayers money per month over the past 13 years and they still want to save it. And its not the workers paying for it like stupid unions say-it is the TAXPAYERS. And we are gatvol.

The bank manager phones Mr Jones and says: “Sorry sir but I have to inform you that your account is in overdraft.” Mr Jones replies: “Don’t worry, I will write you a cheque to fix it”. It is exactly the same mentality from these clowns. Cloud cuckoo land with endless money supposedly coming from somewhere but nobody knows where but it is somebody’s responsibility to find it.

This is the actual point of make of break South Africa.
If the unions win, we are finished.
If government stands its ground, even (best case scenario) if SAA is then shut down / liquidated, there is a future in the country.
Its actually as simple as that

“The unions counter that their members shouldn’t have to pay the price of years of mismanagement and misappropriation of the airline’s funds”
And who has been ultimately responsible for this mismanagement and misappropriation for all these years? Any guesses?
Yes the cANCer government, the same government that these union members continue to vote for year after year after year.
So sorry “Union Members” this actually your own doing. Time to wake up!

Why only NOW, Mr Gordhan?
And are you ready to do the same with other SOEs that are past their sell-by dates?
Because the next watershed moment is Feb 2020 when tax payers are turning and refusing to pay higher VAT and whatever else the AMC government is planning.

I don’t have a problem with paying VAT. Everybody pays it. They should lower income tax and raise VAT.

The problem with that is the poorest are then punished and they can least afford it. Unless you zero-rate basic items. And hopefully healthy ones – not sugar.

@Chris Stoffel – Completely agree.
@Anzhu – The poor benefit from consuming mostly zero rated products, plus get free water, electricity, schooling, medical, housing, money. What more. All they need now is economic growth.

Nah, the poorest are not punished that much because they receive social grants. It’s the rest who support them that are punished by VAT twice over.

Gordhan brushed off criticism that government lacks urgency, pledging to hold a press conference to announce the holding of a press conference in the near future.

The tough decision that is required is for the ANC to admit that it is too incompetent to manage a can of cat food let alone an airline or anything else for that matter.

However, that would require honesty and it is as clear as day light, the ANC hasn’t got any.

Strange times indeed. Work for a SOE but have been prohibited to fly SAA. No reason(s) given. Feel much safer not flying SAA. Close it down. It is an embarrassment.

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