Thu, 12 Dec 2019

SAA strike will quicken its demise - business body

News24
16 Nov 2019, 05:43 GMT+10

The decision by two labour unions to go on strike at SAA is one of the worst choices that could have been made for a sustainable approach of restructuring of SAA, an international aviation expert who prefers to remain anonymous, told Fin24 on Thursday.

Over the past week Fin24 reported that SAA is apparently scrambling to find R2bn in working capital before the end of November in order to stay afloat.

Late on Thursday evening, the embattled state-owned airline announced that it is cancelling flights - apart from certain exceptions - due to a strike by the South African Airways Cabin Crew Association and the National Union of Metalworkers of South Africa, which started on Friday morning.

Reasons given for the strike include SAA's planned restructuring announced on Monday, which might put 944 jobs in jeopardy, a wage increase of 8% that was denied, and a demand to have certain services be insourced immediately.

The unions are apparently set to meet with the SAA board again on Saturday.

"SAA is overstaffed and under-skilled. I am not 'union bashing', but SAA is not competitive in its current set-up," said the international aviation expert.

"It seems that some believe there will be a continuous loop of additional government support, while this is not the case," he said.

Anton van der Bijl, head of the legal department at union Solidarity, told Fin24 on Friday that its members are not striking at SAA at the moment.

Solidarity will be meeting with its legal counsel during the coming week to establish the way forward.

"If SAA prevents us from being part of the retrenchment process, we will take legal action. We are preparing ourselves for the retrenchment process and the survival of SAA," he said.

SAA losing R52 million a day as unions and airline remain deadlocked

By Friday afternoon the Association of Southern African Travel Agents could not yet estimate the scale of the impact of the SAA strike, according to its CEO Otto de Vries.

"Our members are currently all focused on re-booking their clients, to ensure minimal disruption," he told Fin24.

The South African Communist Party (SACP) on Friday afternoon said it is concerned about "the ease and cavalier manner" in which SAA management has approached the workers' strike.

"Outsourced operations are the biggest cost driver at the SAA, according to the arguments presented by the unions," said the SACP.

It called on the SAA management to be "transparent" about all the cost drivers affecting the viability of the airline, including details and costs associated with aircraft lease and fuel agreements, including any "middlepersons" and their cost implications.

SAA strike to go ahead, unions say their demands must be met

According to the Cape Chamber of Commerce and Industry, more than just the fate of SAA is at stake. In its view, union members and their leaders will have to face the fact that they can do nothing by striking but hasten the demise of SAA.

"SAA's salary bill is already 24% of its total costs, its cumulative losses are more than R2bn and next week it hopes to get an equivalent amount in taxpayer loans - because no one else will," said the Chamber.

Gerhard Papenfus, CEO of the National Employers' Association of South Africa said in a statement that, if an employer is bankrupt and the staff component is completely disproportionate - as is the case of SAA - a union's negotiating power is so eroded that the last thing it can afford to do is to strike.

"SAA behaves as if it is still solvent, which it isn't, especially if its salvation was dependent on further funding from a real-world commercial bank, and not State bailouts," said Papenfus.

"SAA pretends as if its service is indispensable, which is not the case. Its airspace market share (local and international) is in the region of 20%, which will be taken up by other carriers in the event of SAA's demise." He too warned of the negative impact of the strike on the SAA brand.

SAA spokesperson Tlali Tlali told journalists at a media briefing at OR Tambo International Airport on Friday that the strike is costing the airline a revenue loss of R52m per day, Fin24 previously reported.

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