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?

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

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.

Is it sustainable?

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:

“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.