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Union suspects there could be a 'secret plan' to sell SAA

13th February 2020 BY: News24Wire

A key union at South African Airways (SAA) has said it suspects there may be a "secret plan" to sell the cash-strapped flag carrier and that "someone could be waiting in the wings" to buy the heavily indebted state-owned airline.

Phakamile Hlubi-Majola, national spokesperson for the National Union of Metalworkers of South Africa (Numsa), told Fin24 the union deduced the possibility of a plan to sell the airline from the announcement last week by SAA's business rescue practitioners of planned route cancellations and potential job cuts.

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In a separate earlier statement announcing an urgent Labour Court application to stop the flag carrier from retrenching workers, Numsa accused government, the SAA board and executives of wanting to sell the airline as quickly as possible in order to "cover up for looting and corruption at the airline".

The urgent application is set to be heard on Thursday morning. The business rescue practitioners intend to oppose this application.

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Labour 'not the biggest cost driver'

Hlubi-Majola has also criticised potential staff cuts, particularly in light of controversial procurement contracts referred to in forensic reports and at the Zondo Commission of Inquiry into State Capture. 

"It does not make sense to cancel routes and ignore what is really bleeding the airline. Procurement is the biggest cost driver and not labour, we as labour are convinced of that," she told Fin24.

The National Transport Union, which also has members at SAA, told Fin24 that while it cannot rule out the possibility of such a "secret plan to sell SAA", it is not aware of one. 

"If anything, we have a long-term plan to mitigate any losses which may occur against our members. NTM's resolution is in line with our principles of no privatisation, no job losses and no loss of benefits regarding our members. We, therefore, condemn [any] plan to privatise SAA," the union said.

'Conducive to rumours'

The SAA Pilots Association also told Fin24 it is not aware of any such "secret plan" to sell the airline; neither is the union Solidarity.

However Solidarity has questions. Its CEO Dirk Hermann told Fin24 that the fact that a proper business rescue plan has not yet been published does create confusion and "a climate conducive to rumours".

In an statement in January, the Department of Public Enterprises, the shareholder of SAA, said that "the creation of a sustainable, competitive and efficient airline with a strategic equity partner remains the objective of government through [the business rescue] exercise".

The BRPs also said in a statement on the weekend that the announcements of planned route cancellations were aimed at improving SAA's balance sheet and create a sustainable airline which would be more attractive for a potential strategic equity partner.

A reliable source with knowledge of the finances and operations of SAA, but who requested to remain anonymous, told Fin24 that, in his view, if there is a indeed a "secret plan", it would probably rather involve shutting SAA down and continuing operations with its subsidiary, low-cost airline Mango.

The source does not, however, think this would be a good idea. He is of the view that the most sustainable way forward for SAA would be to enter into a joint venture or franchise agreement with another airline. SAA would then keep its traffic rights but limit its risk and potential losses.

The source believes the Comair model, whereby it operates its own low-cost airline kulula.com as well as the full-service British Airways under a licence agreement, is a good example. "There is a market for a full-service domestic carrier in SA. British Airways is a good example," he says.

'Just looking at numbers'

He is worried that the BRPs are "just looking at numbers" instead of taking a strategic view regarding SAA's potential if it enters into a commercial agreement with another airline.

"I don't believe in a conspiracy [to sell SAA]. I think there is just incompetence at play. I cannot see how anyone can benefit from selling the airline. It just needs skilled people to fix it," he says.

He further pointed to SAA's past history, saying it was hard to try to find an equity partner to invest in the embattled airline. That is why a JV or franchise agreement would make more sense to him.

He cited as a successful example the recent JV SAA concluded with Air Mauritius. In the past, there had been a proposition to try to do the same with Ethiopian Airlines.

In November last year, before SAA went into voluntary business rescue, Sir Richard Branson said his Virgin Atlantic would be open to buying an equity stake in SAA, according to a report in Business Day. Virgin Atlantic is set to restart seasonal direct flights between Cape Town and London in October this year, it was announced on Wednesday. 

EDITED BY: News24Wire
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