File picture: Mike Hutchings/Reuters.
File picture: Mike Hutchings/Reuters.

SAA lost almost R200m from the crippling strike

By Siphelele Dludla Time of article published Nov 17, 2019

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JOHANNESBURG - Troubled  SAA has said that it would resume its international flights today after a crippling week that plunged it into a further financial crisis as cabin crew abandoned their flights, forcing the airline to cancel more than 100 local and international flights.

SAA said on Friday that its domestic and regional flights would however remain grounded after 3 000 workers, mostly cabin crew members, went on strike just days after the airline said it wanted to cut its overhead count by nearly a thousand in order to save R700 million.

“This operational decision is aimed at minimising the impact of disruptions for the airline’s customers,” spokesperson Tlali Tlali said.

The strike saw SAA shedding at least R200m, plunging its balance sheet into a deeper crisis.

The workers, affiliated mostly to the National Union of Metalworkers of South Africa (Numsa), are demanding an 8 percent wage increase demand across the board.

SAA has said that the wage demand would cost push its cost by at least R100m a year.

SAA has R40bn on obligations that need to be settled immediately, but it has no cash in its reserves. 

SAA has suffered R28 billion in losses in the last 13 years.

Ratings agencies have pointed to the airline and power utility as one of the key liabilities to the country’s fiscal position.

The struggling airline has has failed to submit its audited financial statements for two successive financial years after posting a loss of R5.67bn for the year to the end of March 2017.

In September, the government issued a R5.5bn bailout to cover SAA’s operational costs.

Tlali said the airline was in talks with its lenders to raise at least R2bn for operational costs, though this would not even cover the wage increase demand.

The National Treasury has said it would settle SAA’s loans of R9.2bn. 

SAA  interim chief financial officer Deon Fredericks said that the more than 5 000 employees that the airline employed cost 23 percent of its total expenditure.

Fredericks said maintaining the number was unsustainable.

“If, through the (restructuring) process, we don’t arrive at an acceptable number, then we need to look at other interventions and what we can do in consultation with the unions to make sure the process succeeds.”

But Numsa spokesperson Phakamile Hlubi-Majola said SAA’s biggest cost driver was the R25bn spent on fuel procurement per annum.

“We do not believe that our demands are unreasonable,” Hlubi Majola said. “Management has said that the retrenchment of 944 workers will save the airline R700 million, but this airline executive management and board has consistently refused to tackle these issues which have a direct bearing on the high debt levels affecting the airline. This also has a direct impact on workers’ ability to receive an increase.”


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