SAA execs to take pay cut to help air carrier

Top executives at South African Airways (SAA) have agreed to take a 5% pay cut to show their seriousness about turning around the loss-making airline.

This was confirmed by the airline’s acting chief executive, Musa Zwane, when he spoke to parliament’s committee on finance yesterday.

Finance Minister Malusi Gigaba had earlier voiced frustration at the slow pace at which SAA was taking steps to stem its financial losses and warned that defaulting on its debt payments could trigger a wider reaction from state-owned entities’ lenders.

Gigaba said one example was the fact that the technically bankrupt carrier had yet to cut remaining loss-making routes.

“The delays in taking ourselves out of the Abuja-Johannesburg [route] means we are losing millions of rands every month on that route,” he told the committee.

Gigaba said the company could save more than R1 billion every year simply by resolving issues with ticket sales, making cost savings in terms of staff incentives and stopping revenue leakages.

Dealing with these issues would be part of the conditions attached to the promised recapitalisation of the airline, the minister said, confirming that he would only make an announcement on further financial support for SAA in his medium-term budget policy statement in October.

Responding to a question from ANC MP and former tourism minister Derek Hanekom as to where Treasury would find the money to inject into SAA, he said the state was mulling this.

Hanekom had stressed that the recapitalisation would mean that the sum eventually extended would no longer be available for service delivery, noting that if the figure were R2 billion, it could have been used to build 20 000 low-cost houses.

Gigaba responded: “It is not just announcing a once-off, we need to announce a plan for SAA so that we know, over the next three years this is what we will be giving SAA” annually.

“But there is no way we are going to be giving SAA money for free. […] We will also release the conditionalities attached to the recapitalisation,” he said.

SAA’s chief financial officer Phumza Nhantsi confirmed that it was operating on the assumption that it would receive a R13 billion recapitalisation over the next three years. – ANA