Photo by: Creamer Media
South African Airways (SAA) has started a restructuring process that could see the cash-strapped State-owned carrier cut its workforce by almost a fifth.
As required by South African law, the airline has started talks with labor unions about its plans, which could affect 944 of its 5 149 employees, SAA said in an emailed statement late Monday. The proposed reorganisation includes all SAA divisions and departments, excluding low-cost arm Mango, Air Chefs and the SAA Technical unit, it said.
SAA is one of several State-owned companies, including power utility Eskom Holdings, the South African Broadcasting Corporation and State arms manufacturer Denel that are fighting poor finances after years of mismanagement and alleged corruption. Finance Minister Tito Mboweni said last month the government is talking with potential investors in the airline to ease the burden on the national budget.
Identifying an equity partner has been proposed in the past, though no buyer has officially come forward. Ethiopian Airlines group CEO Tewolde Gebre Mariam last month said his airline would consider taking a stake if a request was made. Richard Branson, the founder of Virgin Atlantic Airways, has said his company would also consider taking a stake.
SAA has incurred more than R28-billion in cumulative losses over the last 13 years and missed the deadline to submit its earnings for the financial year ending March. While it recently received a 5.5 billion-rand government lifeline to extend maturities on outstanding debt, it hasn’t been able to reach an affordable repayment plan with creditors.
“We urgently need to address the ongoing loss-making position that has subsisted over the past years,” acting CEO Zuks Ramasia said in Monday’s statement. “That is why we are undergoing a restructuring process that seeks to ensure effective implementation of the accelerated long-term turnaround strategy amid the present prevailing operational challenges.”
In his medium-term budget policy statement last month, Mboweni said the government will repay SAA’s outstanding government-guaranteed debt of R9.2-billion over the next three years.