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SAA may fire a fifth of its workforce as part of restructuring

Cosatu denounces the decision.

South African Airways (SAA) has set itself up for a confrontation with labour unions after the cash-strapped carrier initiated talks that could see its workforce reduced by almost a fifth.

The reorganisation of all the airline’s units, excluding low-cost carrier Mango, Air Chefs and the SAA Technical unit, could result in 944 of its 5 149 employees being fired, SAA said in an emailed statement late Monday. The Congress of South African Trade Unions, the country’s biggest labor group, denounced the decision and accused the airline of failing to consult adequately.

“It’s a reckless announcement. You cannot just throw people on the unemployment line,” Sizwe Pamla, the federation’s spokesman, said by phone on Tuesday. “There is no talk to unions. They already know the specific number of people who are going to be retrenched. There are options that have to be explored.”

SAA, power utility Eskom, the South African Broadcasting Corp. and state arms manufacturer Denel are among state-owned companies whose finances are in dire straits after years of mismanagement and alleged corruption.

Read: SOEs’ results proof of massive problems

Finance Minister Tito Mboweni last month said the government is talking to potential investors about taking a stake in the airline to ease the burden on the national budget.

Identifying an equity partner has been proposed before, though no buyer has officially come forward. Ethiopian Airlines Group Chief Executive Officer Tewolde Gebre Mariam last month said his airline would consider investing if a request was made. Richard Branson, the founder of Virgin Atlantic Airways Ltd., has said his company would also consider taking a stake.

SAA has incurred more than R28 billion of cumulative losses over the past 13 years and missed the deadline to submit its earnings for the financial year through March. While it recently received a R5.5 billion government lifeline to extend maturities on outstanding debt, it hasn’t been able to reach an affordable repayment plan with creditors.

“We urgently need to address the ongoing loss-making position that has subsisted over the past years,” acting Chief Executive Officer Zuks Ramasia said in Monday’s statement. “That is why we are undergoing a restructuring process that seeks to ensure effective implementation of the accelerated long-term turnaround strategy amid the present prevailing operational challenges.”

In his medium-term budget policy statement last month, Mboweni said the government will repay SAA’s outstanding government-guaranteed debt of R9.2 billion over the next three years.

© 2019 Bloomberg L.P.

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You first have to loose money for decades before you wake up.

They should just sell the whole thing as they dont have the skills to run it profitably.

It has been transformed and has the cadre deployment cancer.

and 20% is just a drop in the ocean of all useless cadre employed pals in every existing soe and government entity – looks more than an admittance of a self created problem by the government, but as usual the bull is not tackled by the horns – or is it just to impress possible interested foreigners like richard branson to save the saa ??????????

Most of the SOEs must be closed down, liquidated or sold. SAA has not been a going concern, a commercially viable, sustainable company for years. It has more than R 22 B in debt, loses R 500 m a month, has received on top of all the irresponsible loans, tens of billions in bail outs.
It hardly has any assets as it leases most of its planes.
Liquidate it ASAP, there are 50 or 60 airlines operating in and out of SA who can take over the routes, and will never ask for tax funded bail outs.
My suggestion for Eskom, read my comment below :
http://www.moneyweb.co.za/news-fast-news/france-reportedly-ready-to-give-financial-support-to-eskom/

This may be too little too late but at least it’s a step in the right direction and sends a message to the unions that there are going to be retrenchments at SOE’s. Expect massive kickback from the unions but this is a tough process we have to go through. As the saying goes, a journey of a thousand miles begins with a single step. Call me overly optimistic but maybe this is the first green shoot we have been looking for.

It’s now time for the showdown at the OK Corral. The unions, by and large, have destroyed education for millions of Black children (via SADTU), and are now threatening to destroy SAA. Bring it on! Why keep this rotten moribund airline afloat any longer? We have several commercial airline companies that can do a far better job. It’s past time these Communist-inspired entities must be brought down. And if the unions shut down Eskom, this will be the end of not only all Eskom union workers, but the start of a new dawn of PV and wind power for SA.

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