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Trade union Solidarity believes business rescue essential to save SAA; other unions strongly disagree

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Trade union Solidarity believes business rescue essential to save SAA; other unions strongly disagree

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12th April 2018

By: Rebecca Campbell
Creamer Media Senior Deputy Editor


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Trade union Solidarity believes that business rescue is the only way that jobs can be saved at embattled State-owned national flag-carrier South African Airways (SAA) and the company put back on a sustainable footing. This was made clear at the media briefing at the union's head office on Thursday. The union will file court papers to this end on May 15.

"The biggest risk to job security [at SAA] is insolvency," highlighted Solidarity chief executive Dr Dirk Hermann. "There is a definite risk to jobs if they [government and SAA management] are to continue to act as they are. ... Business rescue is a mechanism to protect jobs."


He pointed out that, from the Auditor-General's report, SAA is likely to be totally insolvent within a couple of years. At that point, there would be massive job losses. Business rescue would restore solvency to the airline, after which it could seek a strategic equity partner.

"What is important for SAA is that they cannot give job assurances," stated Solidarity Research Institute head Connie Mulder. "We are convinced this [business rescue] is the only route available to us."


Mulder cited the Auditor-General's report, which had reported that the airline had suffered a total loss of R5.6-billion last year. Since 2016 SAA's operating loss had jumped by 1000% to R3.7-billion. Its total loss over the past five years comes to R31.6-billion. This, the union has calculated, amounts to R7 700 for each taxpayer. This amount, it also pointed out, could have built 300 new schools which could have educated 210 000 children.

Mulder also noted that SAA has had nine CEOs in nine years and that the 2013 Long-Term Turnaround Strategy (LTTS) had still not been implemented. "The [airline's] position is dire," he said. "It does not mean that nothing can be done about this. ... SAA is unique. They are [in a] chronic [condition]. They are rescueable, they are recoverable. But there is not much time." Hermann averred that government was banking on a new LTTS for SAA, but that a more radical strategy was needed.

Hermann noted that the union's approach to the crisis at SAA was also a "battle of ideas". He described government's approach to be "more government" and a major role in the country for State-owned companies. Solidarity, on the other hand, believed in less government and in privatisation or public/private partnerships.

"This would be the first time that a State-owned enterprise (SOE) would be placed under business rescue," if the union's initiative is successful, he stressed. "This would set a precedent. So it would be quite difficult for the government not to oppose [business rescue] because of the precedent. ... This would create a climate of accountability in government." He also expected SAA to oppose the union.

The union will only file its court papers in the middle of next month in order to give it time to contact other stakeholders, to see if they wished to join in the action. They would also seek support from taxpayers. Hermann described the union's initiative as a lawful tax protest, pointing out that its members were also taxpayers.

In response to Solidarity's already announced intention to seek business rescue for SAA, five other unions representing workers at the airline announced, also on Thursday, their opposition to the move. They are the South African Transport and Allied Workers Union (Satawu), the South African Cabin Crew Association, the Aviation Workers Union of South Africa, the National Transport Movement and the National Union of Metalworkers of South Africa.

"[These] unions want to make it clear that they are 100% supportive of SAA CEO Vuyani Jarana, the board and the turnaround strategy currently unfolding at the national carrier," stated a press release from Satawu. "It has hardly been six months since the board and Jarana were appointed to take over the running of SAA but already there is a spirit of openness blowing through the corridors. Jarana has proven himself to be transparent and willing to engage by holding regular meetings with the various unions within SAA. Putting the SOE under business rescue will not be in the best interest of the workers and it is for this reason the [five] unions are willing to be cited as co-respondents with SAA in Solidarity's legal action."


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