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SAA: The straw that broke the camel’s back

Strike action escalated the national carrier’s problems.

Just weeks after the National Union of Metalworkers of SA (Numsa) achieved its ‘victory’ over South African Airways (SAA), scoring a 5.9%, wage increase, the national carrier has been placed under business rescue.

Numsa and the South African Cabin Crew Association (Sacca) were on strike for eight days over wages and possible retrenchments. This forced the already financial burdened airline to ground several flights and resulted in bookings being cancelled, among its other problems. According to SAA, the strike cost it R52 million a day.

The cash-strapped national carrier had been in a dire state since 1999 due to mismanagement and government interference. It last released annual financial statements two years ago.

The strike created the perfect storm for the airline to go into business rescue after it had been considering it for about three months.

Jannie Rossouw, professor of economics and head of the School of Economic and Business Sciences at the University of the Witwatersrand, says though SAA has had financial problems for years, the strike was “the straw that broke the camel’s back”.  

“The strike action definitely forced the government’s hand on this one and they went into business rescue, so trade unions should be careful in their demands,” says Rossouw. “This is a very serious lesson.”

In a statement released on Sunday, Minister of Public Enterprises Pravin Gordhan said the strike had damaged the airline’s reputation and that it would need to go through “radical restructuring” to ensure its operational sustainability.

Funding process interrupted

SAA was in the process of trying to secure a R2 billion loan with a government guarantee in order to keep it in the air, which is what lenders were looking for in their recent negotiations with the airline.

Then the strike action hit, causing a delay in initialising the required R2 billion and at the same time increasing the amount of money needed.

The strike escalated SAA’s problems in the following ways:

  • It caused jitters in the market and among passengers;
  • As news of the liquidity crisis rippled through the aviation and allied markets, insurance companies began to cancel their underwriting of SAA tickets. International insurance companies also cancelled their underwriting of SAA tickets.
  • The airline began to see a massive decline in new bookings.

For their part, the unions have yet to respond to the news of the airline going into business rescue. Numsa said it would put out a statement on the issue and Sacca also said it would address the matter later. At the time of publishing, neither union had responded to Monyeweb’s queries.

Meanwhile, SAA’s financial difficulty has left both its staff and passengers in a bind. The carrier battled to pay its employees in November – paying staff 50% of their salaries on time and the balance a few days later, and has accepted payments for tickets it might not be in a position to honour. 

Listen to Duduzile Ramela’s interview with lawyer Ulrich Roux, director of Ulrich Roux and Associates:

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Yes. Sadly the price this country’s trade unions will pay for their own selfish stupidity will eventually catch up with them, so that they too can join the rest of the country in coming to grips with the consequences and repercussions of their actions.
Bravo!

So now we blame the unions? At least we can shift the blame to someone else. The camel’s back was broken a long time ago but the ANC never admitted it. Or they were too stupid to see it.

The unions are a big driving force of ANC policy including loading up SOE’s with 75% more staff than is necessary for a normal company to run. So yes we can blame the unions. The unions are a cancer to the normal functioning of the economy.

There’s a whole heap of people we can shift the blame too. Including the people, who, for years were constantly agreeing to the unreasonable above inflation salary demands of the unions, out of fear of sabotage. So while we’re at it. Yes, we’ll blame the unions.
Even an eight year old will tell you, you get what you get and you don’t get upset. Do we really need grade 1 and 2 kids explaining that to trade unions? Maybe we should blame the parents of the world.
So I don’t believe we should “shift blame”. Keep the blame there. The unions are a major part of the problem. But include a few others.
End of the day, I agree, laying the blame squarely at one groups feet doesn’t do any good. Just like inflating overheads doesn’t help.

The unions had nothing to do with it. ‘We’ allow them to do what they do.

Maybe you didn’t read the title of the article. Nobody is saying that the unions are 100% to blame but they were “the final straw” that broke things. As in their brilliantly timed strike that they thought would have absolutely no repercussions to the continued operation of SAA. The straw that broke the camels back and “the final straw” are english idioms that are synonymous.

“Straw that broke the camel’s back
From Wikipedia, the free encyclopedia

The idiom “the straw that broke the camel’s back”, alluding to the proverb “it is the last straw that breaks the camel’s back”, describes the seemingly minor or routine action that causes an unpredictably large and sudden reaction, because of the cumulative effect of small actions.

This gives rise to the phrase “the last straw” or “the final straw”, meaning the last in a line of unacceptable occurrences, provoking a seemingly sudden strong reaction.

The above definition claims that it causes an unpredictable reaction. In the strike at SAA it was pretty obvious and not unpredictable of what the end result would be in the end.

The tripartite alliance is bankrupt. The Alliance is a group of morally and intellectually bankrupt people who come together to implement outdated and bankrupt ideas. Everything they touch is bankrupt. They are destroying the basis of the economy. Bankruptcy is the unavoidable consequence of a system where “accountability lies with the collective”.

Yup, this is the non-PC truth.The correct term is bANCrupt 🙂

As a poor South African, the demise of SAA mean nothing to me as I have never been on a plane and I doubt I ever will be on one. I have more pressing issues to worry about. Free education, offordable water and electricity, reduced VAT, free and fair medical care. These are the things that when I voted the ANC into power I thought I would enjoy.

Yaa Hey! It must be a disappointment to realise you wasted your vote. Its all just going one way now.

The SAA board actually wanted SAA liquidated ASAP and Pravin said no. Business resque with a R4 billion bailout.

How much money have they already wasted that should have gone to the things you mentioned.

Funny how Pravin knows better than the board. Is he saying he presided (as shareholder) over a useless board? Why did he not do something about it.

Or he does not know better (more likely) and should be fired.

Boombang. You use the word ‘free’ a lot. Nothing is for free.

You do know that you can change your vote if the party of your choice doesn’t deliver?

A state-owned enterprise like SAA is better than having a bunch of entitled people clamouring for “free” stuff that someone else must pay for. With SAA at least you employ some people to give some level of service in return. The problem is that unionized staff also became so concerned with their own demands that they had little regard for for the needs of anyone else. To hell with paying customers and taxpayers, who needs them? It’s called biting the hand that feeds you. Time to put this dog down.

and now a “Patriotic” patronizing Pravin want us to support this mess by buying SAA tickets……what are they doing for us….sweet blue f…..!

And how exactly was the ANC going to delivery this to you in a sustainable manner? It seems like you never quite thought it through before you wasted your vote.

The tax base is too small and the ‘we want free’ people are too many. Work it out.

Boombang,are you for real? Everything that is ‘free’ – e.g. education, healthcare, water, electricity – someone else has to pay for. This payment is called ‘tax’. Mike Schussler a couple of years ago calculated that about 3.5 million people in SA were paying 95% OF ALL TAXES. Note – ALL taxes. That’s income tax, VAT, corporate tax, CGT and a hundred other stealth taxes. So please explain to me how – with 57 million people in SA – those 3.5 million can provide ‘free everything’ for you. Do the maths man.

I get your point Dougalan, At least lets pay once. Only tax no school fees, no medical expenses, no water and light. Tax me…

No such thing as a free lunch. Someone, somewhere, somehow is paying.

If you consider how much state/taxpayer wealth has been poured into the black holes of SOEs (and from there into nomenklatural offshore bank accounts), affordable essentials could have been delivered instead if the ANC was not too busy looting.

This really did backfire. (we knew it would) Unions did not think so. When you see the toy toying you know how much thought went into the strike.

Imagine if the toy toyers put the same amount of energy into their work, they could all knock off at tea time. Job done!

And as we see what is left of SAA in the sunset, so too will we see other state owned enterprises right behind then. Some coal companies ex Gupta will be behind too following the road into the sunset. Then the Unions who think they run the country can also follow as they chase and advise the employees of Companies that are about to be buried, loosing their members and the fees they collect for their lovely advice.

We have to ask ourselves if we do we still have an effective functioning government? Ramaphosa has a small window of opportunity to reveal this teeth and abilities. If he does not jump in now and fulfil his original promises, then he will be swallowed alive by some hungry comrades who are just waiting to pounce. Then we will have another useless President just like Zuma. Cyril, you pounced on SAA and good for you. It is now time to pounce on other SOE’s, the size of your cabinet, the number of provinces with all their useless MEC’s etc. or you will loose your power base as your comrades are waiting in the wings to eat you alive otherwise.

The problem in this country is that many voters don’t connect their daily lot to their choices at the ballot box, because life between elections happens almost in slow motion and memories are short.

By contrast, the consequences of the SAA strike were so immediate that unions may have difficulty convincing their members, many of whom will soon likely be jobless, that there is no connection.

Hopefully this is a turning point for unionised labour, especially in the public sector. In pulling down the temple, one must be cautious not to bury oneself.

yes, the direct result of the unions’ shortsightedness, all brought onto themselves by just demanding without taking into account what the effect of it would have on saa

“hopefully” the eskom unions got a shock that will bring them back to the reality of a real business entity’s rules otherwise they will be next in line for the same action

A direct result? Nonsense. They are the people who have suffered the most as a result of SAA management incompetence of the last decade. People who made career choices by joining a company with the title of national airline. What should have been a position of prestige and respect is now one where they are fighting for their very existence.

There is a big difference between SAA staff and Eskom. I have rarely met an unprofessional SAA employee – and I am a platinum voyager member on their airline – and gold on AirFrance. I can promise everyone that SAA is a pretty good airline, compared to many I have flown.

This saga makes me think of the old joke of the guy taking the last small sip of the bottle of wine being beaten up for “having drunk the whole bottle”. Same with the Unions here, SAA was beyond bankrupt already, but by striking they have given everybody a big stick to beat them with. Soon the narrative will be: SAA could have been saved, if it were not for the strike, and repeated enough, this lie will become the truth in the public mind.

In my 25yr professional career, I have been through 2 corporate mergers and one company downsizing. In every case, it is the lowly employee who gets screwed, and in all 3 of those situations, I can tell you that I wish I was unionized and had a voice to air my grievances.

In SAA’s case here, I don’t think we are in a position to judge them. This article gives some perspective to their plight.

https://mg.co.za/article/2019-11-12-saa-unions-lament-multi-million-rand-increases-for-pilots-amid-retrenchments

Everything will be for free until nothing is left….. then nothing will be for free… I trust that most people will understand it….

Nah, this has nothing to do with the strike – this thing was bloated and done long time ago.

Its a pity that those at the bottom will feel and suffer as the result of the looting that has been going on whilst those who should in truth bear the brunt will be shielded

Thats communism for you

Good luck to anyone with a SAA Xmas ticket to see the family or go on holiday… Haha
Comair, Flysafair or a putco bus would have been a better bet! Or a donkey!

And Jamnadas Pravin says that R 4 BILLION is NOT a bail out from the taxpayer and expects all to believe this SACP dishonest talk.

So what is the R 4 Billion then Jamnadas? A loan? Going to be repaid? And do you understand what restructuring is? Its firing of ANC voting Union members, as well as changing processes, management lines , routes, input costs etc.

Did he say that it’s not a loan? Such a liar. He probably Means that it will be senior to all the other money he’s put in over the years. But as there is limited value, it’s a zero sum game. He m8ght put in money to fund working capital but that WC would previously gave belonged to the cap stack. Dont know anything abkuy the capital structure but hopefully the givernment money is in as secured loans? Ungortunately, soubtful this givernment has done anything to secure its investment…

From bad to worse, every day, and still no-one from the ANC openly and publicly acknowledges that they do not have the ability to run SA Inc!!??

The water is finding it’s level, so to speak, and it ain’t high!!

Failed State!

Striking against bust entities is silly. It makes them more bust. However the unions have been able to get away with it for 25 years thanks to the ANC

Last famous words from the cusatu’s sissy “we did it” you surely did well done to “rent-a-strike” wonder where your next job is going to be

The Unions have much political influence – and no political accountability – time for them to stand alone from the ANC.

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