Today's Labour News

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saa thumb medium95 76BusinessLive reports that according to the Department of Public Enterprises (DPE), South African Airways (SAA), the future of which hangs in the balance after a crippling strike, is determined to remain open for business.  

But, it will go through a "radical restructuring process" to survive.  The airline’s board and executive committee have been locked in intense discussions with the DPE and the Treasury over the past week in an effort to secure a loan guarantee of at least R2bn in order for it to continue trading.  The DPE’s statement on Sunday made no reference to whether the guarantee had been extended, but said "SAA cannot continue in its current form.  The airline group will now go through a radical restructuring process, which will ensure its financial and operational sustainability.  There is no other way forward."  The Treasury has apparently not budged for the loan guarantee.  As commercial banks will not provide funding without it, SAA cannot access working capital, which it needs to pay staff and suppliers as its operating costs far exceed revenue.  This has left SAA with only three options, namely liquidation, business rescue or radical restructuring.  While the airline has already announced job cuts, which it has agreed with unions will be negotiated starting in January, the cuts to both workforce and routes now will need to be far deeper and will have to be negotiated sooner.  The break-up of the SAA group, which includes the low-cost carrier Mango, airline SA Express, catering business Air Chefs and aircraft maintenance division SAA Technical, has become a growing possibility.

  • Read the full original of the report in the above regard by Carol Paton at BusinessLive

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