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
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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.
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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.
Shut it down. It’s just another African vanity project, the money could be better used elsewhere!
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?
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.
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”.
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
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
Virgin Atlantic to buy South African Airways.even Emirates Airways
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.
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 b***k economic empowerment and the incredible levels of corruption in south africa.