Members of the South African Cabin Crew Association and the National Union of Metalworkers of South Africa members picket at the SAA Airways Park in Kempton Park, South Africa, Friday, Nov. 15, 2019. South Africa's troubled state-owned airline has begun canceling flights after two unions announced their workers would go on strike to protest nearly 1,000 expected job cuts. (AP Photo/Themba Hadebe)

JOHANNESBURG – Public Enterprises Minister Pravin Gordhan has washed his hands of strike-ridden SA Airways (SAA), telling the national carrier and unions that the government could not afford the unions’ wage demand, as it had no additional funding.

SAA acting chairperson Thandeka Mgoduso said yesterday that Gordhan told the unions and SAA executives that the government would not get involved in the wage dispute.

Mgoduso said Gordhan made it clear that both the Department of Public Enterprises and the National Treasury had no money. Gordhan met the two parties in Pretoria yesterday.

Mgoduso said Gordhan told them that the government was committed only to the R2 billion guarantee that it promised for SAA operations.

“You’ve got to acknowledge that the fact that the players that will resolve this are the executive and the unions, not the minister (Gordhan),” Mgoduso said. 

“Even now I’m from the meeting with the Department of Public Enterprises, and the statement is the same: there is no money. We can’t look to the fiscus for anything. We’ve got to do work and do what needs to be done as a business.”

Last month, the government gave SAA a R5.5bn guarantee to stay afloat.

SAA chief financial officer Deon Fredericks said SAA’s lenders had agreed in principle to give the airline an interim funding of R2bn for working capital.

Fredericks said the airline would have to borrow more money to cover the estimated R300 million losses caused by the strike.

“The banks in principle have agreed,” Fredericks said. “The current debt is R9.2bn, but the shareholder indicated in the medium-term budget that it will be repaid over the next three years. The debt that we will incur now is R2bn, but because of the difficult operating environment and unintended impact of the strike, we will have to procure additional debt.”

Fredericks said SAA would publish its audited financial statements for 2018 once it had satisfied the liquidity status as a going concern by concluding the R2bn transaction and additional debt. 

This as SAA moved to assure the markets that it was on the road to operational recovery with all international flights to eight destinations and some regional flights to six destinations back in operation.

However, domestic flights remain grounded, and SAA services were being carried out by sister airline Mango.

Workers downed tools at SAA on Friday after the airline announced restructuring plans that would result in the loss of more than 900 jobs. 

Unions are also demanding an 8 percent salary increase, but SAA says  it can pay only 5.9 percent in March 2020, assuming funds are available at that time.

SAA acting chief executive Zuks Ramasia said some employees had decided to return to work, despite receiving threats and intimidation from the union.

Ramasia said SAA would be approaching the Labour Court to interdict additional demands and intimidation by some union members.  

“SAA has incurred costs related to rebooking customers on other airlines, claims from customers, denied boarding compensation, lost average daily revenue, lost future sales, aircraft parking, SAA Cargo revenue losses, and salaries for pilots and cabin crew who are not on strike,” Ramasia said.

BUSINESS REPORT