South African Airways embarks on restructuring process

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.

Although the process may lead to retrenchments, Ramasia said SAA hoped to minimise the impact while offering support to those who would be directly affected.

She said SAA 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 SAA to compete in the market place; and aggressive international and regional competition for revenue stimulation and network optimisation

“In addition, SAA’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.