SAA pi­lots set to rebel over costs trim plan

In­com­ing chief ex­ec­u­tive of the na­tional car­rier will have a tough time get­ting air­line aloft

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo

FI­NANCE MIN­IS­TER Malusi Gi­gaba can ex­pect stern re­sis­tance from the SAA Pi­lots As­so­ci­a­tion if he wants to pro­ceed with his plans to “ra­tio­nalise” the in­cen­tive scheme of the na­tional car­rier’s pi­lots.

Gi­gaba on Fri­day told leg­is­la­tors there was a need to re­visit what SAA pi­lots get paid as a cost-sav­ing mea­sure, while also tack­ing transformation and gen­der pro­gres­sion in the in­dus­try. “We need to ra­tio­nalise in­cen­tive scheme of our pi­lots.

“The in­cen­tives of the pi­lots must also deal with gen­der and racial di­men­sions. Women pi­lots at SAA have not been in the in­dus­try for long, mean­ing their pay is less than their male coun­ter­parts.

“This means that your most se­nior cap­tains get to choose which routes they want to fly.

“There is a lot I could say in this re­gard, which I think I shouldn’t say here be­cause we still have to meet with the board and take a de­ci­sion on the is­sue of in­cen­tives,” Gi­gaba said.

The chair­per­son of SAA, Dudu Myeni, has pre­vi­ously taken aim at the in­cen­tives that the na­tional car­rier’s pi­lots get, say­ing that while the pi­lots con­sti­tuted only 12 per­cent of the car­rier’s to­tal work­force in SA they ac­counted for more than 40 per­cent of the air­line’s salary bill.

Cathy Bill, the gen­eral man­ager at the SAA Pi­lots As­so­ci­a­tion (Saapa), said it was not true that pi­lots were over­paid and en­joyed more bar­gain­ing power than the rest of the na­tional car­rier’s em­ploy­ees.

Same pay

“All pi­lots at SAA get the same pay and are based on years of ser­vice. We do a bench­mark ex­er­cise ev­ery five years and South Africa’s salary mea­sures com­pared favourably to what is be­ing paid in­ter­na­tion­ally. We use the Hay sys­tem to bench­mark what is rea­son­able pay for our pi­lots,” Bill said.

The or­gan­i­sa­tion said an­tag­o­nis­ing the pi­lots meant the risk was high of los­ing skilled and ex­pe­ri­enced pi­lots at SAA.

Saapa said most of the 750 pi­lots of SAA meet the in­ter­na­tional re­quire­ments to work abroad and have a cu­mu­la­tive to­tal of more than 12 000 years of ex­pe­ri­ence at SAA alone.

The na­tional air­line is set for a tense face-off with its em­ploy­ees after the Na­tional Union of Metal Work­ers of South Africa (Numsa) and SA Cabin Crew As­so­ci­a­tion (Sacca) staged a march on Fri­day de­mand­ing bet­ter pay and work­ing con­di­tions for their mem­bers.

Irvin Jim, the gen­eral sec­re­tary of Numsa, said SAA is also re­fus­ing to in­crease wages for the ma­jor­ity of work­ers, in­clud­ing the cabin crew, ground staff, cargo staff and tech­ni­cal staff, but it is will­ing to con­tinue pay­ing out gen­er­ous pack­ages to the pi­lots.

“Pi­lots at SAA are pam­pered and they re­ceive gen­er­ous ben­e­fits and high salaries at the ex­pense of the ma­jor­ity of work­ers. Numsa is de­mand­ing a freeze in the pay in­crease of the top 100 man­agers, in­clud­ing all 800 pi­lots, so the ma­jor­ity of work­ers can re­ceive a long over­due pay in­crease,” Jim said.

SAA said in re­sponse to the march by the two unions that it was un­clear why Sacca and Numsa had not re­sorted to us­ing the pro­vi­sions of the SAA Bar­gain­ing Fo­rum Agree­ment, which pro­vided for the ap­pro­pri­ate plat­form to ad­dress de­mands by any party to the agree­ment.

THE LACK of avi­a­tion ex­per­tise in the cur­rent SAA board will mean that the na­tional car­rier’s in­com­ing chief ex­ec­u­tive, Vuyani Jarana, will have a tough time try­ing to turn around the ail­ing com­pany’s for­tunes.

For­mer Sky­wise co-chair­per­son Javed Ma­lik said on Fri­day that Jarana’s lack of ex­pe­ri­ence in the in­dus­try, cou­pled with that of the board, would re­sult in the sta­tus quo at the cash-burn­ing na­tional car­rier stay­ing firmly in­tact.

“It is go­ing to be very chal­leng­ing for Jarana, who comes from a com­pany that does not strug­gle with cash flow, to un­der­stand the in­tri­ca­cies of a state-owned en­ter­prise (SOE), es­pe­cially SAA, which is strug­gling for cash.

The ill-fated Sky­wise ceased op­er­a­tions in Novem­ber last year, after the Air­ports Com­pany of SA (Acsa) grounded it for un­paid fees.

The high turnover of chief ex­ec­u­tives has not re­sulted in im­proved for­tunes for SAA and now the air­line is in need of a R13 bil­lion re­cap­i­tal­i­sa­tion from Trea­sury. The lat­ter said it would an­nounce its de­ci­sion in its Medium-Term Bud­get Pol­icy State­ment in Oc­to­ber.

Fi­nance Min­is­ter Malusi Gi­gaba told leg­is­la­tors on Fri­day that he was look­ing at bring­ing the right ex­per­tise to the SAA board, but de­cried the ap­point­ment of other key ex­ec­u­tives be­fore Jarana.

“I am un­der­tak­ing an in­de­pen­dent share­holder re­view so I can get a proper as­sess­ment of the board and then be able to take a de­ci­sion on how to tighten the board and how to re­struc­ture it.

“The board has taken steps which or­di­nar­ily one would say they should have waited (to ef­fect) un­til there was a new chief ex­ec­u­tive. This is with re­gard to the ap­point­ment of the chief re­struc­tur­ing of­fi­cer and the re­cruit­ment of the chief com­mer­cial of­fi­cer… or­di­nar­ily, the chief ex­ec­u­tive should have been party to these ap­point­ments,” Gi­gaba said.

The 11 non-ex­ec­u­tive SAA board mem­bers were ap­pointed last Septem­ber for three years. A gov­ern­ment state­ment at the time said the new board brought with them skills that in­cluded fi­nance; man­age­ment of risk trea­sury, in­vest­ment and projects; busi­ness strat­egy; mar­ket­ing and man­age­ment.

The board will soon have a new chair­per­son, after Gi­gaba in­di­cated that its chair­per­son would no longer serve after her term ex­pires in Septem­ber.

In the cur­rent board, only Than­deka Mgo­duso had prior avi­a­tion ex­pe­ri­ence, as she served on the Air Traf­fic Nav­i­ga­tion board.

Peter At­tard Mon­talto, re­search an­a­lyst at No­mura, said in­vestors were in­creas­ingly un­likely to ap­prove turn­around strate­gies at SAA un­til they de­liv­ered re­sults.

“We note the an­nounce­ment of a new chair­per­son and chief ex­ec­u­tive for SAA as well as new board and chief ex­ec­u­tive at Eskom, but we see this as sta­bil­i­sa­tion at a weak place, rather than a turn­around. We also need to watch for a ‘sand­wich ef­fect’ at SOEs, where some parts of boards and ex­ec­u­tive man­age­ment are re­placed with po­ten­tially weaker mem­bers,” Mon­talto said.

Mean­while, the Na­tional Union of Metal Work­ers of SA (Numsa) on Fri­day called on the en­tire board to step down.

Numsa gen­eral sec­re­tary Irvin Jim said: “We de­mand that the min­is­ter of fi­nance re­move the en­tire SAA board as it has failed in its fidu­ciary duty to en­sure good, clean gov­er­nance. We de­mand that the board be re­con­sti­tuted by mem­bers of civil so­ci­ety, trade unions, labour and gov­ern­ment rep­re­sen­ta­tives to en­sure trans­parency and good gov­er­nance.”

PHOTO: BLOOMBERG

An SAA jet takes off from JFK In­ter­na­tional Air­port in New York. The SOE’s high turnover of chief ex­ec­u­tives has not re­sulted in im­proved for­tunes.

PHOTO: THOBILE MATHONSI

Vuyani Jarana will have a tough time­try­ing to turn around SAA’s for­tunes.

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