Loss-making state-owned flag carrier South African Airways (SAA) has announced plans to begin a restructuring that includes paring the carrier’s unionized workforce by about 1,000 jobs, about a fifth of the workforce.
Two unions representing workers at the insolvent carrier have threatened to strike for an indeterminate period, beginning Nov.15. SAA management and the unions are deadlocked over a demand for an 8% across-the-board wage increase. Unions also want guaranteed job security for at least three years and the in-sourcing of services, such as security, cleaning and ground handling.
SAA management has warned that a strike could shutter the airline.
The airline faces liquidity challenges associated with its high operating costs, volatile fuel prices and currency exchanges, and an older fleet. SAA, which faces aggressive international and regional competition, has lost about $2 billion over the past 13 years and has relied on extensive government support to remain aloft. For the third consecutive year, SAA has not published an annual report.
“SAA’s balance sheet has historically been weak and remains so despite recent substantial capital injections from the government. 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,” Acting Chief Executive Zuks Ramasia said in a Nov. 11 statement.
“We urgently need to address an ongoing loss-making position that has subsisted over the past years. That is why we are undergoing a restructuring process that seeks to ensure effective implementation of the accelerated long-term turnaround strategy amidst the present prevailing operational challenges,” she said.
