SAA Leadership Compact, a ground breaking initiative

1 May 2020

Extraordinary times call for extraordinary measures. The challenges facing South African Airways has required the Leadership of the all stakeholders to rise above the crisis created by both the weaknesses within SAA and COVID 19, and agree on a long-term vision and strategy to mitigate the impact on employees, tourism, the aviation industry more broadly and become a catalyst for economic development and job creation. This requires an absolute focus on becoming internationally competitive for safety, quality, and cost. It will not be the old SAA but the beginning of a new journey to a new restructured airline, which will be a proud flagship for South Africa.

The process that the Minister and SAA workers have embarked upon is bold and audacious. A Leadership Compact has been signed by all parties that commits to taking a new approach, to acknowledging that there will be a major performance-based culture change for all leadership, management and employees as the transition to a new airline takes place.

In the Past, the airline industry has been able to navigate its way through many difficult periods based on the known facts relating to the market, socio-economic, financial, skills and related issues. Now within months we have seen a virtual global collapse of the airline industry. Who would have foreseen that the giants of the industry such as Boeing, British Airways and Virgin would be struggling to survive and retrenching thousands of employees. We are now faced with the unknown post the COVID-19 pandemic and there is no precedent or certainty which can be followed in developing a new strategy. The parties will be pioneers in writing a new book.

Now, with the Covid-19 storm surging around us and the fog of economic uncertainty descending, a new and bold approach is required if there is to be any chance that South Africa can retain vital airlift capacity and trade connections, through a strategic national asset, with both public and private sector participation, which is internationally competitive, viable, sustainable and profitable.

Moving forward, and looking to the future, the Minister has established very demanding timelines for the development of the Business Rescue Plan and parameters in order to determine what path the old SAA could follow. The transition to the new airline may require sacrifices, pain and hardships for all concerned, particularly for those employees who may be displaced. The Leadership Forum recognise that they have a responsibility to mitigate these challenges through a range of measures including but not limited to, preferential reemployment, reskilling and enterprise development opportunities.

Unions and the Department are working together on a business model that deals with what a new national carrier of the future will be but also crucially how this can be achieved to ensure a competitive edge in safety, quality and costs in the sectors which SAA competes.

The agreed intention is to produce an airline which is a catalyst for investment, job creation in key sectors, economic growth throughout all regions of the country and is a mirror to the world reflecting the splendour and beauty of our great nation. And to do so by designing an airline that will be funded through a variety of options such as strategic equity partners, funders and the sale of non-core assets and the parties are still of the view that the state must continue to play a role.

The creation of a new, dynamic airline, with the correct corporate structure, led by skilled, competent and experienced management and staffed at competitive and benchmarked rates will allow for the new SAA to compete in the post Covid-19 world.

Airlines around the world are failing, but with the correct vision, leadership, business and operating model, funding and implementation the new national carrier will be well positioned to take to the skies again and contribute to the South African and African economy.

The shareholders and Union leadership recognise that there are going to be serious challenges to overcome. However, It is essential to build a leadership coalition which is robust and strong enough to find solutions, and establish the foundations of a new airline with a growth path in this uncertain environment, which are in the best interest of our nation and all its citizens.

Issued by Richard Mantu on behalf of Department of Public Enterprises, 1 May 2020