South African Airways (SAA) has informed all its 5146 employees that it is embarking on a restructuring process which may lead to job losses.
Acting Chief Executive Officer, Zuks Ramasia said the airline has commenced a consultation process with all employees in line with section 189 of the Labour Relations Act. The act requires an employer to consult with recognised labour unions and keep abreast employees who may be affected by the restructuring process.
She said South African Airways has faced numerous challenges over the past few years culminating in the current grave situation. The challenges include, funding and liquidity challenges; inability to borrow indefinitely without repaying debt; high interest costs on loans; volatile and fluctuating fuel price; currency volatility; insufficient revenue and cash generation in relation to operating cost; ageing fleet which is expensive to maintain and is fuel-inefficient, making it difficult for South African Airways to compete in the market place; and aggressive international and regional competition for revenue stimulation and network optimisation.
“In addition, the airline’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."
“We urgently need to address ongoing lossmaking 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.
“The scope of the restructuring encompasses all SAA divisions and departments and excludes the subsidiaries; SAAT, Mango Airlines and Air Chefs,” she said.
Ramasia said as at 1 November 2019, SAA had a total workforce of 5 149 globally. It is difficult to estimate the number of employees who may eventually be impacted. No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected.