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SAA faces pay protests as it officially runs out of cash

Aug 03 2017 10:42
Matthew le Cordeur

Cape Town - The National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (SACCA) will march to South African Airways (SAA) on Friday over a request for pay increases, just as the entity has revealed it has run out of cash, meaning they may not even get their basic salary.

The unions are marching on Friday to hand over a memorandum to SAA officials. This will coincide with the SAA board’s appearance before the standing committee on finance in Parliament. Here, the board will face tough questions regarding its negative cash position and a requirement for a R13bn cash injection over three years.

MPs were sent documents ahead of this meeting, which set out the cash flow crisis that SAA has found itself in.

Documents show that the airline went into a negative cash position in July, meaning SAA might not be able to pay its workers, let alone give them a raise.

SAA had a net cash outflow of R568m in July, which is forecast to increase to R936m in August. The forecast then sees a R918m cash outflow in September, a R134m cash outflow in October, a R183m cash outflow in November and a R679m cash outflow in December.

The dismal cash position comes as the unions prepare to embark on a march where they will hand over a memorandum tabling their concerns, including the need for a wage increase.

READ: SAA misled Parliament about liquidity problems - DA

“SAA is … refusing to increase wages for the majority of workers, including the cabin crew, ground staff, cargo staff, and technical staff, but it is willing to continue paying out generous packages to the pilots, who are mostly white and male,” Numsa and SACCA said in a statement on Thursday.

“Numsa has lodged a dispute through the CCMA and mediation on these and other issues will take place soon. We hope to reach an agreement soon because if talks fail, then we may have to resort to a strike.”

SAA received a R2.207bn lifeline from Treasury in June to repay its loan to Standard Chartered Bank. This followed the R5bn going concern guarantee it received from Treasury in September 2016, after a new board was appointed.

SAA hasn’t made a profit since 2011 and has not had a permanent CEO since 2015. Cabinet is considering Vodacom executive Vuyani Jarana for the role.

Finance Minister Malusi Gigaba told Parliament in July that SAA has to pay lenders R15.963bn in 2017. The R2.207bn bailout was a part of this total amount. That leaves another R13.755bn that must still be paid, with cash SAA does not have.

READ: Gigaba: SAA asked for R10bn in bailout plan

This is because Gigaba revealed SAA has already used R18.624bn of its R19.144bn government guarantee allocation. This means government has to find the above cash elsewhere for the state-owned airline that is bleeding R370m of losses every month. In other words, it has no choice but to sell its own assets to fund the shortfall.

In his letter, Gigaba revealed that “government is currently identifying assets for disposal to offset the expenditure incurred and render the operation neutral in respect of the current year’s budget balance”.

Details of this asset disposal will be made in his mini budget in October, he said.  

READ: Gigaba could target R14bn Telkom stake for massive SAA bailout

Those assets could likely come from the R14bn stake that government has in Telkom, Democratic Alliance MP Alf Lees explained. Government has a 39.52% stake in Telkom.

“The question is what highly liquid assets does the government have access to that it can sell at short notice,” Lees said. “One such asset is the shares that the state holds in Telkom that are estimated to be valued at R14bn.”

He believes SAA will not be able to pay what is due “including the possibility of not paying salaries in full or in part”.

“Even if the state bails out the full amount borrowed, it will not solve the problem as the losses continue and so there will continue to be a cash shortfall,” he told Fin24 on Thursday. “Any private company would be headed for liquidation.”

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sacca  |  saa  |  ccma  |  numsa  |  malusi gigaba  |  industrial  |  companies

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