Administrators for South African Airways have launched a consultation covering its almost 5,000 staff members on job cuts as it bids to restructure its workforce for a slimmed-down operation.
The indebted carrier has been led by business rescue practitioners (BRPs) under a formal restructuring since December 2019.
The joint BRPs have now formally issued notice advising its employees that it is to begin consultations on 12 March over the cuts. The notices were issued to SAA unions, with whom it has been in talks over recent days.
“Our intention has always been to preserve as many jobs as possible through this process while still focusing on having a sustainable airline and platform for growth,” note the joint BRPs.
They cite further recent challenges to the carrier, on top of the R26 billion ($1.7 billion) cumulative losses of the past six years.
”Load factors on the airline have declined steadily from August 2019 to a low of 71% in January 2020. Forward sales have also declined significantly with all markets showing negative or minimal growth, within a very competitive market,” it says. ”The recent marked decline in travel due to the COVID-19 virus will further exacerbate matters.”
This, together with the temporary grounding of some aircraft following a maintenance audit last October, a strike in November which resulted in the cancelling of a series of flights and the carrier being placed in formal restructuring in December, had resulted in a significant negative impact on SA revenues.
”The overall result has seen a decline of R1.3 billion in revenue with the cost base that remains more or less flat,” the airline administrators note. ”The changes required at SAA are therefore both structural and economic. They are urgent if liquidation is to ultimately be avoided, in which event all employees will lose their jobs.
”To avoid this scenario and to build a commercially viable business the BRPs propose a fundamental restructuring of its business such that it can best meet market demands and operate as a sustainable African airline. To achieve these goals the strategy is to reduce loss making services and increase efficiencies, which will see a reduction in the aircraft fleet as well as services and route flow.”
SAA had in February outlined plans to cut a number of routes as part of its restructuring, including cutting all its domestic services except Johannesburg-Cape Town.
”The proposed restructuring will necessitate a reduction in jobs,” it adds. ”The BRPs contemplate that all 4,708 employees will be affected and the number of jobs that will exist in the restructured organisation will be the subject of the consultation process. Significant changes to conditions of employment, including remuneration and benefits, appear unavoidable and will be sought by agreement.
It adds that while a number of alternative options have been considered, none would assist SAA in achieving ”all of its required operational efficiencies”.
The notice applies only to SAA staff and excludes subsidiaries like low-cost unit Mango and SAA Technical. The initial consultation will be held on 12 March and an expedited consultation process ending by 8 April has been proposed in an effort to avoid liquidation.
“We must emphasise that no final decisions have yet been taken, nor will any final decisions be taken until we have exhausted consultation and hopefully reached agreement,” add the BRPs’.