You might have one schoolteacher or more who made an enduring impression on you. It might be something that they said or that they attuned you to. Although their name might have faded in memory, their imparted wisdom endures.
The tragedy that is South African Airways (SAA) had me recalling my high school physical education teacher, Mr Lourens. For younger readers, physical education was reduced to a life orientation learning outcome in 2000. What Mr Lourens taught me had nothing to do about his specialisation. He introduced me to Richard Bach’s Jonathan Livingston Seagull. It tells the story of a young seagull with big ambitions, pushing himself to fly at tremendous speeds, eventually reaching a higher plane of perfection. He then teaches the ambitious among his flock.
One of my favourite Richard Bach quotes, which might not be that unfamiliar, is: “If you love someone, set them free. If they come back, they’re yours; if they don’t, they never were.” This made me ponder if now is not the time for government to say “C’est la vie” and cut SAA loose – that is, set it free. If this is not a decision that government wants to make, by postponing it, a decision is, in effect, being made. As I write, the decision could well have been taken out of government’s remit.
At the time of writing, SAA was in the grips of a national strike that was reportedly costing the airline R52-million a day, owing to flight cancellations. The strike was triggered when SAA announced its plans to cut 944 jobs (it had 10 071 employees in 2017), while offering a 5.9% wage increase, as opposed to the 8% demanded by the labour unions. SAA’s yearly wage bill was R6.1-billion in 2017, at an average salary of R608 778. In April 2015, SAA operated 4 535 flights, compared with 3 027 in April this year. The national carrier has not turned a profit since 2011 and taxpayers have forked out more than R30-billion to keep it in the air. No prizes for spotting the obvious red flags.
In his October 30 Medium Term Budget Policy Statement (MTBPS), Finance Minister Tito Mboweni, under the heading ‘Other State-owned companies’, noted: “In its current configuration, SAA is unlikely to generate sufficient cash flow to sustain operations. It is unable to repay outstanding government-guaranteed debt of R9.2-billion. Government will repay this debt over the next three years to honour its contractual obligation. Operational changes at SAA are required urgently.”
Under the heading ‘Contingent liabilities’, he stated: “Over the past 13 years, SAA has incurred over R28-billion in cumulative losses. The airline is insolvent and, in its current configuration, unlikely to ever generate sufficient cash flow to sustain its operations. Government has transferred R5.5-billion to SAA in the current year to enable the carrier to extend maturities on outstanding debt obligations, giving it time to develop an affordable repayment plan with creditors. However, without a debt repayment plan supported by government, the airline’s lenders are unlikely to extend outstanding government-guaranteed debt of R9.2-billion beyond the end of the fiscal year, or to provide the additional facilities needed for SAA to remain liquid. If this happens, government is contractually required to step in and repay this debt.”
To ensure that we are on the same page, www.investopedia.com defines a contingent liability as a potential liability that may occur, depending on the outcome of an uncertain future event.
Add to the MTBPS a recent report by Fin24, which stated that SAA was “scrambling to obtain R2-billion in funding as working capital by November 20”.
On South Africa having a national carrier, Gerhard Papenfus, CEO of the National Employers Association of South Africa, said: “SAA pretends as if its service is indispensable, which is not the case. Its airspace market share (local and international) is in the region of 20%, which will be taken up by other carriers in the event of SAA’s demise.”
Another Bach quote that summarises the precarious position in which SAA finds itself: “It always works, when you know what you are doing.”