Mayday as SAA strike bites
Acting chair warns unions stoppage will push airline over the brink of bankruptcy
They must carry on their consciences … they are responsible for the death knell
Thandeka Mgoduso Acting SAA chair
● Leaders of the crippling strike at SAA must carry on their conscience that they will be the cause of the airline’s downfall, its acting chair, Thandeka Mgoduso, said as the strike began on Friday.
Mgoduso said cash-strapped SAA was surviving on the “benevolence” of its lenders and might struggle to pay salaries at the end of the month because the strike meant no money was coming in.
The airline, which has needed billions of rands in government bailouts and guarantees to stay in business, grounded domestic and some regional and international flights on Friday.
It offered to refund customers, get them new bookings on other airlines.
Mgoduso’s comments came after SAA directors told parliament that the national carrier would not be able to survive the strike, which would cost it R50m a day and could force it into liquidation.
Mgoduso said the board had been implementing turnaround strategies and that until now liquidation had not been on the table.
But she said: “If this strike perpetuates and there is no money coming into the company, everyone that we owe will want their money and where does that money come from?”
She said it was pointless to talk about business rescue.
“The assumption is it can be rescued … There is nothing to rescue and that is why we are doing what we are doing to ensure that we return the company to a state where it can be turned around.
“The employees that are on strike are the ones that are going to cause SAA to close,” Mgoduso said.
“They must carry on their consciences that with all the lofty language they are trying to use in public spaces, they are responsible for the death knell at SAA.”
Unionised airline ground staff and cabin crew are demanding an 8% salary increase across the board. They rejected an offer of 5.9% by SAA, which had originally said there would be no increase for them at all.
The National Union of Metalworkers of SA (Numsa), which is leading the strike, said it was an “indefinite national shutdown which will take place at all airports across the country”.
The union and the South African Cabin Crew Association (Sacca) want the increase to be backdated to April and paid from next month. They want half the back pay to be paid next month and the rest in January.
SAA has said it would have to pay backpay in staggered amounts while it tries to raise the cash.
Contributing to SAA’s financial woes is its commitment to a 5.9% salary hike for pilots, whose pay accounts for 10% of payroll costs. SAA’s wage bill accounts for 27% of its total costs.
The carrier is legally obliged to pay the pilots according to an agreement that was reconfirmed in 2010.
Discussions are under way about reviewing the agreement, which Mgoduso described as “onerous”.
“We went to the rest of the organisation with 0% because we don’t have money, we don’t even have money for this 5.9% that is due to the pilots, but we are legally bound. So the unions came back and said: ‘Where is the fairness in this?’”
She said SAA then offered other staff the 5.9% as well, “to say: ‘Let there be some equity here even if we don’t have the money’”.
This week the airline announced it was embarking on a restructuring that could lead to job losses among its 5,146 employees. Mgoduso said there was no link between the restructuring and the 5.9% offer.
Mgoduso said SAA suffered from a culture of underperformance. “There are no consequences for not doing what one is supposed to do.
“We have a culture where salary increases are like an entitlement and are not linked to productivity. It is important that that issue is looked at.”
SAA was overstaffed and costs exceeded revenues, she said.
Asked about a union proposal to insource functions to save costs, Mgoduso said: “Who says insourcing saves costs … It’s not a given that if you are employing people so that they deliver a service, that it’s going to be better.”
Numsa and Sacca said in a statement on Friday that inflated contracts for security, cleaning, IT, ground-handling and logistics were crippling SAA’s finances.
“If SAA was to meet the 8% wage demand, this would cost [about] R100m per annum. In other words, the cost of two days’ flight cancellations is equivalent to our entire wage demand for the whole year,” the statement said.
Grant Back, chair of the SAA Pilots Association, said union pleas for “accountable and capable leaders” had over the years fallen on deaf ears.
“SAA is broke because of the political interference of the Dudu Myeni era and the continued mismanagement of the airline since her departure.
“The employees of SAA did not put the airline into the financial mess it is in, SAA’s management team did.”