South African Airways Backtracks On Staff Cuts – For Now

South African Airways has not entirely ruled out cutting staff, despite recently agreeing to a pay rise for existing employees and forgoing a plan involving 900 job cuts. Whether or not the business is sustainable without cutting staff remains to be seen.

SAA
SAA is facing tough times already. Photo: Aero Icarus via Wikimedia

What is going on with South African Airlines?

Government-owned South African Airlines has not made a profit in over seven years. The carrier has been struggling with poor domestic demand along with competitive international carriers leaching its long haul routes. Coupled with the fact the airline has an old, inefficient fleet (still flying Airbus A340s for example), it puts it at a considerable disadvantage.

So much so, that the airline has been on the verge of bankruptcy for several years and has been relying on bailouts from the government to stay liquid. This funding comes at a price, however. They are expected to make the airline far more efficient and budget-conscious

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In steps the new plan to cut 900 jobs from the 5,149 employees in order to save money. However, this plan was massively opposed (and who can blame them with the suggestion to fire 1/5 of their entire workforce). In the end, a strike was held.

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The outcome of the strike action was that, not only did the 900 workers get to keep their jobs, they also all got a backdated paycheck increase of around 5.3%. Needless to say, this move to save the company through layoffs has now cost the airline and the taxpayer even more money.

SAA A350
SAA is modernizing its fleet however with new aircraft being delivered. Photo: SAA

What’s the plan now?

From here, the airline is considering positioning itself for outside investment by the private sector. Like Air India and other government carriers, they have not been able to make their public sector funding model work, with too many accusations of wastage and corruption.

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For this government to now think about the possibility of finding some sort of private equity partner for one of its state-owned enterprises is quite a big ideological shift for the ANC government to make,” – Daniel Silke, Economic analyst

Potential investors include other airlines, like the African powerhouse Ethiopian or possibly even Virgin Atlantic.

Saa strike
The strike also massively affected the reputation of the airline and will take some time to repair. Photo: Adrian Pingstone via Wikimedia Commons

However, what many have noticed is that if a private investor was brought in, one of the first moves they may make would be to strip as many non-performing staff away as possible and reduce wage overheads.

As reported by Aviation Daily, the plans to reduce the airline’s workforce have been put on hold, not canceled, until January 2022. So perhaps these staff members are on borrowed time. With new management on the horizon, they might not stay around for long.

What do you think? What should SAA do with its workforce? Let us know in the comments.

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Craig

An investor should consider updating the fleet. The new aircraft are more fuel efficient and the new generation electronics makes these new aircraft much. Much safer. Even auto land has improved. Make the company more lean and teach all employees to understand how very important the customer is always right is.