Debt-hit Autopax stuck at a crossroad

By Londiwe Buthelezi Time of article published Aug 26, 2013

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Johannesburg - Autopax planned to approach the government about the possibility of disposing of its business as escalating costs had put it in a dire financial situation, the state-owned long-distance bus operator said on Friday.

The company, which operates Translux and City-to-City, has not made a profit in the past 10 years and has accumulated losses of R45 million since 2010 after its recapitalisation by the government.

Autopax, a subsidiary of the Passenger Rail Agency of SA, was the country’s largest long-distance bus company, operating more than 50 000 bus trips a year and employing about 1 500 people, Tumisang Kgaboesele, the chief executive, said.

He said that since 2009, the government had pumped R1.2 billion into the company to keep it afloat until its turnaround strategy, which was supposed to bring the company back to sustainability, could be implemented.

“The turnaround plan is interrupted by the SA Transport and Allied Workers Union [Satawu]… So we are planning to approach the government to look at whether we should continue running an unturnable business,” Kgaboesele said.

The turnaround strategy spoke of the generation of additional revenue by entering into new routes and how the company could further contain its costs.

Kgaboesele said the company was sensitive to retrenching people but salary increases had become unsustainable for it, with the lowest paid driver at Autopax earning R8 500 a month.

The bus drivers have embarked on another strike since August 15 after they and the company clashed about Sunday pay. The strike followed a three-week transport strike in May, which Kgaboesele said ruined Autopax’s prospects to report its first profit after over a decade of losses.

Although Autopax had reported deficits for 10 years, it had been containing costs and had steadily decreased its losses from R100m in 2010 to R19m in 2012. After replacing its aged bus fleet of about 152 buses in 2010 when it was recapitalised, it now had 722, which Kgaboesele said had helped the company reduce fleet maintenance costs.

Vincent Masoga, the spokesman for Satawu, said the union felt that Autopax should not be taking things to “the extremes” of considering disposing of the business.

“We think it’s a publicity stunt that will backfire on them. They are lobbying for public sympathy, which makes one question if they are deliberately running the business down so that the government would close it. We think the government must conduct a critical review of Autopax’s management style,” Masoga said.

He said the union was shocked to hear what Autopax was considering because even during the negotiations, the company had not mentioned anything about the possibility of shutting down. - Business Report

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