Was The South African Airways Strike Called Off Too Late?

Yesterday, Friday November 22nd, striking unions finally reached an agreement with South African Airways ending a week-long impasse. Over the course of the week, airline officials and union representatives have been in numerous meetings with each other as well as with the South African government. The outcome at the end of it all: A 5.9% wage increase and the end of the strike. But was the strike called off too late? Has too much damage been done?

A deal was finally reached, providing a 5.9% wage increase for workers. Photo: Bob Adams via Wikimedia Commons

NUMSA, the National Union of Metalworkers of South Africa and the South African Cabin Crew Association (SACCA) were originally demanding an 8% increase in pay as well as an agreement to stop the cutting of 900 jobs. According to German news outlet DW, the airline had argued it could not meet the union’s demands. In fact, an SAA board member said the following to Reuters:

“We may not have enough cash to pay salaries at the end of the month,” -Martin Kingston, SAA Board member

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The 5.9% pay increase will actually be retroactive to April 2019 according to One Mile at a Time. Furthermore, the airline has agreed that there will not be any layoffs.

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Is it sustainable?

South African Airways strike
SAA has canceled hundreds of flights. Photo: Bob Adams via Flickr

It is already well known that South African Airways has been in financial trouble for quite some time now. Having not made a profit for the last seven years, and with losses of 5.7 billion rand (US$370 million) for the current financial year, South African Airways is in a difficult position.

With limited demand from the South African population and fierce competition on international routes, the airline faces significant headwinds. One Mile at a Time reports that SAA’s Acting CEO, Zuks Ramasia made the following statement:

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“SAA is equally pleased that the National Transport Movement (NTM) also signed SAA’s wage agreement earlier today … We are proud of SAA employees’ sacrifices by supporting the airline in these difficult times. This deal, particularly the fact that we offered a 5.9% salary increase amidst grave financial challenges, is to recognise the company’s employees for the important contributions they make to the overall success of the company, economic development, and inbound and outbound tourism.”

Despite the agreement to go back to work, SAA will still be suspending flights to Hong Kong through to mid-December. This may have more to do with the democracy protests than SAA’s situation.

What next?

According to DW, the government and airline officials are now talking openly about selling parts of the airline off to private investors. Prospective investors are rumored to include Ethiopian Airlines and Virgin Atlantic.

“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

While it’s good news that the airline is operating its scheduled flights again, ending the strike is only a temporary solution. Unless the airline experiences a sudden surge in flight demand and load factor, it still has to deal with its unsustainable financial situation.

What do you think will be the fate of South African Airways? How much time does the airline have left without external investment? Let us know by leaving a comment.

We contacted the airline and requested a comment. However, no response was given at the time of publishing this article.

SAA strike
An estimated 3,000 SAA employees walked out. Photo: Christopher Griner via Flickr
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Good riddance bye bye see ya

Philipp Schier

As an avid reader of SF and a patron to SAA I don’t understand why the government is holding onto such a cash strapped airline?! If they find a privat partner within South Africa, that would jolt the airline into a profitable era, profits that are accumulated will stay in the South African economy and not let be ‘flown’ out by foreign airlines like Virgin or Ethiopian.

Neil

Shut it down. It’s just another African vanity project, the money could be better used elsewhere!

Mark Laycock

I disagree with the notion of it being another “African” vanity. It is a billboard to Southern Africa and what that (or any country is about) represents to the world. Should it be constantly “saved” by taxpayers Rands, probably not. Now, if a proper business plan was hashed out for it based on a commercially viable platform – read here non-corrupt – and followed “normal” business profit based decisions we might be on to a winner. I also strongly support it not being off-shored either – what’s the point in that?

Cahpek

You only need to look at quite a number of examples of so-called “Billboard to the Country” national flag carrier airlines which have been losing huge amount of tax payers money. Almost none of them have been successfully rescued……or at least, there is no sign of it…. eg Malaysia Airlines, Alitalia, Air India, What makes South Africa Airways so special that it should be rescued ? What makes Mark Laycock think that a “proper business plan” would solve the problem? Having a proper business plan is one thing, but more often then not, they are not properly executed or the… Read more »

WordsMatter

The real changes that would be required in a new business plan for SAA to become profitable again, would be too much for the government to swallow politically.

Gary

Ditto to WordsMatter , look at the mixed reaction ,the comments which were made when the new CEO of Eskom was announced. Because it is a White ,is male + South African. The time for setting out a ” proper business plan ” based on a commercially viable , non-corrupt operating platform , LOL hahaha , that boat set sail many many moons ago , infact I don’t believe it was ever due to even be launch for sailing. Because “non corrupt” ,no corruption , does NOT exist , in ANY State Owned Enterprise organisation whilst the country is governed… Read more »

Norman

This reminds me of that great quote of Baroness Margaret Thatcher viz. “The problem with Socialism is that you eventually run out of other peoples’ money”.

George Blackwood

One has to ask how the other air operators in SA can operate without government intervention. It is time to reduce rhe number of staff and thereby cut costs. BA/conair was our domestic airline of choice as they were streets better than SAA. Stopped flying SAA internationally years ago after poor service and uncompetitive airfares

Amazon

I am not a South African but I think SA is a brand name for South Africa across the globe. ET is looking to invest in SA and hopefully it takes place.

The aircraft have not been upgraded as much and the cost of flying from LHR to JNB is very expensive considering the product offering of other Star Alliance members The crew are just beautiful people.

Keeping my fingers crossed for SA

Susan

Virgin Atlantic to buy South African Airways.even Emirates Airways

Albé van der Merwe

Impossible to think that I must support an airline that is a money pit to the SA taxpayer. Better not to fly SAA. Huge saving for SA citizens.
Rather save Escom that is vital to our economy.

ExPat

Horrible airline. Flew with them again recently and they are but a shadow of their former glory and an insult to what south africa once was. Just another south african legend vanishing into oblivion, destroyed by black economic empowerment and the incredible levels of corruption in south africa.