Cash strapped South African Airways is considering laying off 20% of its workforce in a restructuring move aimed at stopping its losses. The state-owned national flag carrier of South Africa has nearly 5,150 people on its books and has said that it is embarking on a complete overhaul that “may lead to job losses.”
While reporting on the airline’s restructuring, Flight Global says that the O.R Tambo International Airport (JNB) based SAA is looking at laying off 944 people.
Acting SAA CEO Zuks Ramasia says the airline must restructure
“We urgently need to address the on-going loss-making position that has subsisted over the past years,” says acting chief Zuks Ramasia.
Ramasia claims that the restructuring of the airline and the number of people it employs is intended to grease the wheels of a sped-up turnaround strategy. Mired in debt with liquidity problems and a revenue stream that can’t keep up with costs South African Airways has its back against the wall with seemingly no way out.
“Our balance sheet has historically been weak and remains so despite recent substantial capital injections from the government,” says Ramasia.
“Our continued losses and reliance on government guarantees to borrow money from lenders, have increased the interest costs, which impacts the operating cost of the business.”
Mango Airlines and SAAs maintenance arm will not be touched
The proposed South African Airways restructuring will include all facets of the airline but not have any impact on subsidiary Mango Airlines or the technical maintenance arm of South African Airways.
South African Airways is saying that consultations on how the airline will restructure could last until January 2020. The airline claims that it is trying to minimize its belt-tightening and lessen the effect it will have on the workforce.
“These hard decisions were necessary to put SAA on a more sustainable footing while ensuring we continue to offer customers the best service,” says Ramasia.
Meanwhile, the president of the National Transport Movement, Mashudu Raphetha, told the Eusebius McKaiser Show on Radio 702 yesterday that it was time to unite with sister unions because SAA had decided to “abandon ordinary workers.”
“We anticipated that they will be bringing this retrenchment notice. We know that it is a ploy to scare our members. SAA has increased salaries for pilots and decided to abandon the ordinary workers,” he said.
Union leader threatens to shut the airline down
The union has already rejected a pay offer from SAA because it would only happen if the airline was to receive yet another cash injection from the South African government.
“We are engaging in a ballot on Wednesday and we will also be engaging with our sister unions … to also join. It’s time now to unite … The company is not reasonable, it is not listening to us … If they continue bringing tactics like this then our members will push us towards ensuring that we have a total shutdown of SAA.”
Truth be told, if South African Airways was a private company it would have ceased to exist years ago. The fact that the airline has gone through seven CEOs in just four years should give you some indication of just how difficult it is to manage.
Add to this, rumors of financial misconduct and a fleet of gas-guzzling A340 aircraft it’s no wonder it is in such difficulties. What South African Airways probably needs to do is to liquidate its assets and start over with a leaner model and newer aircraft.
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