Business Maverick


Desperation time for SAA

Public Enterprises Minister Pravin Gordhan. (Photo: Jeffrey Abrahams)
By Tim Cohen
02 Dec 2019 0

In a desperate move to stop South African Airlines snowballing into bankruptcy, the Public Enterprises department has endorsed ‘radical restructuring’ at SAA and blamed trade unions for ‘immense damage’ to the reputation and finances of the stuttering organisation.

The Department of Public Enterprises’ efforts to save SAA have been dramatically set back over the past week as corporate South Africa has begun to pull back from supplying some crucial ancillary services.

Last week, short-term insurance company Santam said it would stop selling ticket insurance on SAA bookings. Almost simultaneously, travel agents Flight Centre, one of SA largest, said it would stop selling SAA tickets. Other private companies that do business with SAA are making similar decisions.

These moves and others reflect frustration with mixed messages from the government, which seems to be in two minds about how, or even whether, to save the airline.

The Public Enterprises’ statement on Sunday night sought to assure the public that government and SAA were seized of the issue, saying over the past few days there have been intense discussions with lenders to secure the necessary funds “to cover the operational and structural transition over the next few months”.

The comment suggests lenders are prepared to make additional funds available, but only on the condition that the restructuring plan SAA previously announced which could involve a staff reduction of more than 900 people, does go ahead. The Treasury is believed to be adopting the same approach.

The Public Enterprises’ statement also pins much of the blame on the actions of the trade unions National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (SACCA) which recently initiated strike action, seemingly oblivious to the possibility that their actions could fatally undermine the organisation.

Adopting an unusually combative tone, Public Enterprises said:

The strike initiated by Numsa and SACCA caused immense damage to the reputation, operations, and the deterioration of the finances of SAA”.

Overall, government’s immediate objective is to try to keep the airline alive so that it can be disposed of, if that is the ultimate decision, as a going concern. Public Enterprises said, “we therefore reassure customers and encourage them to buy tickets with confidence”.

SAA is determined to remain open for business. Management is also committed to ensure financial sustainability going forward. SAA Board and management will intensify its marketing campaigns to rebuild confidence in the airline and will take bold initiatives to increase its market share”.

Yet, the ground is now quickly moving out from under the organisation, and if a decision on supporting SAA is not taken at the last Cabinet meeting of 2019 this week, it could be tickets for SAA. BM