Gordhan: SAA is not too big to fail

Public Enterprises Minister Pravin Gordhan. (Photo: Gallo)
Public Enterprises Minister Pravin Gordhan. (Photo: Gallo)

The South African government signaled it's going to take a hardline approach to its cash-strapped national airline as labour unions prepare to strike over pay and job cuts, forcing the carrier to cancel almost all its flights over the next two days.

"If some tough decisions need to be made, we'll make them," Public Enterprises Minister Pravin Gordhan said in a speech at a conference in New York on Thursday. South African Airways is "not too big to fail."

Two unions – the National union of Metalworkers of South Africa and the South African Cabin Crew Association – which represent more than 3 000 staff at SAA have said they'll go on strike Friday to protest the carrier's failure to meet their pay demands and plans to fire 944 employees.

The two sides held last-minute talks Thursday in an effort to make a deal, but the labour groups rejected an offer and the walkout went ahead.

SAA said it will apply a “no work no pay” principle to those who participate in the strike. While the carrier canceled all domestic, regional and international flights scheduled for Friday and Saturday, partner airlines including Mango, SA Express and Airlink will continue to operate, it said.

“Those who participate in the strike action will not be permitted back to work until the strike is over,” said Martin Kemp, SAA’s acting general manager for human resources. “The rest of the employees who report for duty will be allowed to work.”

According to the unions, SAA is offering a 5.9% wage increase to be paid in March 2020. Unions want a 8% wage increase across the board to be paid on December 13, 2019.

The unions counter that their members shouldn't have to pay the price of years of mismanagement and misappropriation of the airline's funds, and that alternative solutions need to be sought. South Africa's jobless rate is more than 29%, the highest in at least 11 years.

Some of the unions are politically motivated, Gordhan said. "They're risking the future of the airline and the jobs of everybody else. So hopefully they come to their senses before we go too far."

The minister made the comments from New York, where he is part of Team SA to encourage investment in the economy, according to spokesperson of the Department of Public Enterprises Richard Mantu. He told Fin24 via SMS that Gordhan will be back in SA as scheduled.

Meanwhile on Thursday evening, SAA spokesperson Tlali Tlali said that although the meeting with unions did not yield any favourable outcome, the airline is "encouraged by willingness on the part of the unions to continue to meet to find a resolution".

SAA is exploring another avenue and have approached the Council for Conciliation, Mediation and Arbitration to request a mediation in terms of the Labour Relations Act, he added. "A senior commissioner has been identified to facilitate the process. The process is voluntary and we now await indication from the unions as to whether they will participate or not," said Tlali.

The airline has asked passengers who had been booked to travel on all its domestic, regional and international flights on Friday and Saturday not to turn up at airports, but instead to follow the airline's travel policy to exercise their rights following the cancellation of flights because of industrial action. 

According to National Treasury's medium term budget policy statement, government has committed to repay SAA's outstanding government-guaranteed debt of R9.2bn over the next three years. Lenders are demanding a firm repayment plan as a condition for agreeing to extend more funding, SAA has said.

The airline, which has lost more than R28bn over the past 13 years and relies on financial support from the government to remain solvent, says it has no option other than to restructure or place the entire business at risk.

The state is talking with potential investors in the airline to ease the continuing burden the company puts on the national budget. "I am pleased to learn that there are conversations involving South African Airways and potential equity partners, which would liberate the fiscus from this SAA sword of Damocles," Finance Minister Tito Mboweni said last month.

- additional reporting by Fin24.

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