SAA cuts 484 jobs to stabilise turbulent finances

November 18, 2015, 1:49pm

By Matthew le Cordeur, Fin24. Photo: Wikipedia

Cape Town - South African Airways (SAA) has reduced its headcount by 484 staff as the airline works to stabilise its turbulent finances.

New acting CEO Musa Zwane told parliament on Wednesday that by freezing all non-critical positions, SAA managed to reduce the headcount from 8 747 to 8 263.

Explaining the dramatic increase in SAA’s headcount from 2010 to 2014, he said that in 2010, 437 employees procured through labour brokers were absorbed into the company and converted into fixed-term contractors, based on an agreement with organised labour. “In 2013, these employees were converted into permanent employees,” he said.

Zwane said SAA wants to be profitable at an operating level in three years and fully profitable in five years.

He said internal factors impacting SAA’s costs include ageing aircraft, a weak balance sheet, legacy transactions such as the A320 deal and staff costs.

“There has not been a capital injection and National Treasury has indicated there will not be any,” he said. “SAA continues to rely on debt funding on the back of government guarantees. This is extremely costly and contributes to the erosion of SAA’s capital base.

“The estimated cost of funding for the 2016 financial year will be in excess of R1bn,” said Zwane. “SAA can be turned around without a capital injection; however, given the current macro-economic environment this will only be likely to occur in five years’ time. We remain hopeful that government will reconsider capital injection.”

Zwane also said there are no plans to cancel the Johannesburg-Durban route either for Mango or SAA flights. “SAA has reduced capacity on this route by 15% year-on-year and carefully aligned its flight schedule together with Mango’s in order to maximise connectivity into SAA’s regional and intercontinental flights, while at the same time covering all possible times of day for the convenience of our point to point passengers.

“The results have met our expectations as the Durban route has now returned to profitability,” he said. “In addition, the board has approved the resuscitation of the Durban-Cape Town route."