SAA being held to ransom by unions

14 November 2019

The Democratic Alliance (DA) notes that South African Airways (SAA) has grounded all its domestic and international flights for the next few days, following threats of industrial action from unions. The South African Cabin Crew Association and National Union of Metal Workers have stated that they will initiate a strike following SAA’s revelation that it may have to retrench workers as part of its turnaround strategy. SAA is playing into the hands of opportunistic unions as they continue to hold the national carrier to ransom.

The defunct and cash-strapped SAA will undoubtedly remain on a collision course if its leadership structures allow unions to drive the entity deeper into the ground with these actions. Furthermore, by bowing to industrial threats, SAA loses all trust from consumers who make this carrier their airline of choice. Even more harrowing is the fact that certain foreign states will not allow SAA to continue flying into their airspaces if it displays continued degrees of uncertain viability.

Efforts by new SAA management and directors to turn around the fraught state-owned entity (SOE) have not amounted to anything. Reports today indicate that the SOE will be losing over R50 million per day due to the catastrophic decision to ground its flights in anticipation of this strike action. This loss in revenue is compounded by the fact that the airline is already technically insolvent, without sufficient capital to fund its daily operations. It is currently operational solely due to continued state handouts, much like Eskom. The DA thus reiterates its calls for Minister of Public Enterprises, Pravin Gordhan, to place SAA under business rescue and to immediately shutdown SA Express.

Furthermore, by placing SAA under business rescue, the entity will be somewhat able to mitigate the extensive impact of its planned job cuts, as announced earlier this week. As it stands, SAA plans to cut 944 jobs, which translates to almost a fifth of its workforce in order to bring its runaway costs under control.

The airline has been a massive financial drain on the fiscus and the only solution beyond business rescue would be the partial or full privatisation of the SOE. This would prevent SAA from having any further negative impact on South Africa’s economy. These decisions must be accompanied by strict reforms which will also prevent unions from holding the airline, and to an extent, South Africa’s economy, to ransom.

Issued by Natasha Mazzone, Chief Whip of the Official Opposition, 14 November 2019