Bruce Whitfield: SAA is rapidly running out of runway...
- SAA has waited too long to make the hard choices required for its survival, but in the wake of the recent strike, it has had those forced upon it.
- These could either be in the form of brutal cutbacks in the next few days, in return for guarantees and funding, or be shut down.
- According to a government statement: "SAA cannot continue as is."
- For more stories go to the Business Insider South Africa homepage.
The recent 8-day strike at SAA has hastened the inevitable - the end of the airline as you know it. It’s waited too long to make the hard choices required for its survival, and is now having those forced upon it.
It will either make some brutal cutbacks in the next few days in return for guarantees and funding, or be shut down. It has run out of options.
Whether the airline makes it to Christmas and beyond will require Public Enterprises Minister Pravin Gordhan’s most ardent persuasive powers as National Treasury appears determined to draw a line in the sand.
According to a statement from the Department of Public Enterprises, it was working urgently with the airline to convince Treasury that it should extend further guarantees to the bankrupt airline.
But it did caution: “SAA cannot continue as is," in a statement.
SAA like so many other state-owned companies has been a breeding ground of corruption and graft for as long as you can care to remember. A multiplicity of boards and CEOs over more than a decade means that even when the airline had a chance at survival, the incumbents were never in place long enough to make it work before the next lot were drafted in.
Trade unions have been furiously working to show where there has been large scale fraud in procurement, but it’s too little too late.
It’s bitterly unfair that workers, most of whom do a great job every day are going to have their lives ruined. It’s always the staff in companies that suffer as a result of appalling management and failed governance.
Just ask the thousands of employees of WeWork who were told this month their jobs were gone, largely as a result of the leadership failings of founder Adam Neumann. He walked away with about $1 billion (R14.6 billion) as funders struggle to keep the company, which expanded too quickly, with too much debt, solvent.
Corporate failure is seldom the fault of the workers themselves, yet they become the first line of cost-cutting when times turn bad. The labour force is usually the single biggest cost for any company and its usually where panicked managers go first, when their own necks are on the line.
What makes the current cost cutting drive at SAA and other government businesses even worse is how SAA’s political overlords failed not only the airline and the flying public, but the workers themselves.
A host of government ministers at different times in recent decades facilitated the appointment of poor and often dishonest managers to run critical government businesses. SAA and Eskom, both in the news this week, primarily as media reported on their ongoing litany of failures.
But the failures not only sit with government, boards and management teams of failing government businesses. Unions cannot escape culpability for only now taking decisive action against inevitable cutbacks. The horse has not only bolted, but died of old age.
According to a statement from Public Enterprises the strike at SAA, and the cancellation of bookings that followed, resulted in a sudden deterioration of SAA’s financial position. It would have happened anyway. This just hurried the process.
Gordhan appealed for calm as government departments worked to find yet another lifeline for the beleaguered company.
The airline recently failed to turn up at parliament for a scheduled meeting with MPs to explain its problems to those who are supposed to exercise oversight over the carrier. MPs were furious at the apparent snub from an airline that is two years behind on publishing financial statements. The place is a shambles.
If the airline is under any illusions about government's resolve about cutbacks, it needs look no further than President Cyril Ramaphosa's decision to lay off 22 workers at one of his farms in Mpumalanga. He didn't want to keep funding losses. He delivered the bad news personally. He could have funded a loss-making farming operation in perpetuity, and avoided public embarrassment, but he made the tough call instead because it made business sense to do so.
SAA, its unions and staff need to bear that resolve in mind as events play themselves out in the next couple of days.
Bruce Whitfield is a multi-platform award-winning financial journalist and broadcaster.
Receive a daily update with all our latest news: click here.
Also from Business Insider South Africa:
- We asked chefs to choose their favourite Bakers' Choice Assorted biscuit - and were surprised by the results
- Vodacom and MTN are ripping off data customers, the Competition Commission says. Here's why it thinks they stay anyway.
- Christo Wiese to score big from a ‘bet’ on Shoprite shares
- A Sars employee who won R21 million in the lottery no longer owes his child R1 million – because his WhatsApp 'promise' was just another lie
- Coke's CEO says it will listen to complaints – but different flavours with similar packaging probably won’t go away
- A Northern Cape town is claiming SA’s hottest day ever at 54°C – but experts don’t believe it