Johannesburg - SAA’s nightmarish financial predicament could be attributed in part to the exorbitant salaries of some of its senior executives, insiders said.
Insisting that the proposed retrenchments could have been avoided, the sources told the Sunday Independent that the cash-strapped airline recruited some senior managers at double the salaries of their predecessors.
Hundreds of SAA staff affiliated to the National Union of Metalworkers of SA (Numsa) and the South African Cabin Crew Association (SACCA) embarked on a strike this week, which disrupted passengers’ travel plans and cost the airline more than R100million in just two days.
According to a source inside SAA, at SAA Technical (SAAT) alone, the salaries of chief executive Adam Voss and general managers under him have doubled since the New Zealand national took over in June.
“The salary of the previous CEO of SAAT was R3.2million a year but the new CEO Adam Voss is earning R6million per year,” said a source speaking on condition of anonymity.
“General managers of the different units are earning R4million per year, double what the previous ones were earning. Now they want to say SAA doesn’t have money and they have to retrench workers while people have exorbitant packages at the expense of taxpayers,” said the source.
SAA spokesperson Tlali Tlali defended the remunerations of the managers. He said the salaries were deserved and those in the positions were working to turn things around within the organisation.
“We remunerate our employees based on their experience, skills and track record, in accordance with industry standards and subject to the affordability. The SAAT organisational structure has been significantly enhanced with the sole focus on capability and capacity to transform and align SAAT to the expected outcome as per SAA’s Long-term Turnaround Strategy. If the expertise does not exist within the country then the relevant skills will be sought from outside South Africa,” Tlali said.
Another source claimed that some newly recruited managers were currently staying in five-star hotels at the expense of SAA on top of the millions they pocketed in salaries.
SAA announced on Monday that it was embarking on a restructuring process that could lead to a loss of almost 1000 jobs. The retrenchments were expected to affect staff at all SAA divisions and departments. However, employees at its subsidiaries like SAAT, Mango Airlines and Air Chefs would not be affected.
Acting chief executive Zuks Ramasia said they had begun a consultation process with all employees in line with the Labour Relations Act.
“It is difficult to estimate the number of employees who may eventually be impacted. No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected,” Ramasia said.
She said the current situation was as a result of "numerous challenges" faced by the airline over the past few years. Ramasia said the challenges included funding and liquidity; inability to borrow indefinitely without repaying debt; high interest costs on loans; volatile and fluctuating fuel price; currency volatility; insufficient revenue and cash generation in relation to operating cost; ageing fleet which is expensive to maintain and is fuel-inefficient, making it difficult for SAA to compete in the marketplace; and aggressive international and regional competition for revenue stimulation and network optimisation.
“In addition, SAA’s balance sheet has historically been weak and remains so despite recent substantial capital injections from the government. Our continued losses and reliance on government guarantees to borrow money from lenders have increased the interest costs, which impacts the operating cost of the business,” Ramasia said.
Unions representing workers have slammed the airline, indicating that they were not consulted and only heard about the move through the media. The unions have also accused SAA of sidelining their workers while buckling to pressure from pilots who would be receiving backpay of R100m.
On Thursday, Numsa and SACCA rejected a 5.9% wage increase to be paid in March 2020 and the backpay to be paid in instalments beginning on April 1, 2020. They said they rejected that proposal in favour of an 8% wage increase across the board to be paid on December 13, 2019, and 50% of the backpay to be paid with the increase on the same day.
The remainder of the backpay will have to be paid on January 27, 2020.