Chief Executive of South African Airways, Vuyani Jarana said on
Monday that the company was mapping out an austerity plan that would see to job
cut to save the airline .
Monday that the company was mapping out an austerity plan that would see to job
cut to save the airline .
Jarana, who faces the daunting task of turning the flag carrier around, said in
Johannesburg that layoffs and other cuts were unavoidable to contend with a
draining cost-to-income ratio of 108 per cent.
Johannesburg that layoffs and other cuts were unavoidable to contend with a
draining cost-to-income ratio of 108 per cent.
“SAA cannot carry the same workforce, whether it is pilots, cabin crew or administration,”
he told Reuters.
he told Reuters.
“We have to make some tough decisions to save the airline. There cannot be
sacred cows when it comes to SAA.”
sacred cows when it comes to SAA.”
He declined to put a number to the job losses, but two sources familiar with
his plan said the state-owned carrier was likely to cut between 1,000 and 1,500
people via a combination of layoffs and voluntary redundancies to bring its
employee-per-aircraft ratio in line with regional competitors.
his plan said the state-owned carrier was likely to cut between 1,000 and 1,500
people via a combination of layoffs and voluntary redundancies to bring its
employee-per-aircraft ratio in line with regional competitors.
The numbers include roughly 300 flight attendants, according to one of the
sources. Some of the carrier’s 700 pilots, encouraged to look for jobs
elsewhere, have drafted their own severance pay offer to SAA, the second source
said.
sources. Some of the carrier’s 700 pilots, encouraged to look for jobs
elsewhere, have drafted their own severance pay offer to SAA, the second source
said.
In a dramatic fall from grace over the past decade, SAA has lost its place as
Africa’s biggest airline and a symbol of patriotic pride to become a source of
frustration for taxpayers who have forked out more than 30 billion rand ($2.3
billion) since 2012 to keep it in the air.
Africa’s biggest airline and a symbol of patriotic pride to become a source of
frustration for taxpayers who have forked out more than 30 billion rand ($2.3
billion) since 2012 to keep it in the air.
SAA’s woes are emblematic of the struggles of traditional flag carriers around
the world, such as Malaysia Airlines, Air India and Air France-KLM.
the world, such as Malaysia Airlines, Air India and Air France-KLM.
These airlines are contending with low-cost rivals and a spike in oil prices,
which puts pressure on those with the highest labour and other non-fuel costs.
which puts pressure on those with the highest labour and other non-fuel costs.
The problems are also an illustration of the malaise afflicting the airline
industry in Africa, whose airlines have the weakest finances and emptiest
planes of any region of the world.
industry in Africa, whose airlines have the weakest finances and emptiest
planes of any region of the world.
Jarana told Reuters he was also setting up other moves to reduce the airline’s
33.5 billion rand operating costs.
33.5 billion rand operating costs.
According to him, the cut include squeezing suppliers for better deals and
cutting back on its number of flights to London from twice to once a day.
cutting back on its number of flights to London from twice to once a day.
The carrier makes its biggest losses on the London route because it faces
fierce competitions that expose its inefficiencies.
fierce competitions that expose its inefficiencies.
“My view is that the starting point to getting out of the hole is to stop
digging, you stop doing the things that sink you deeper into trouble,” Jarana
said in his office near O.R. Tambo International Airport in Johannesburg.
digging, you stop doing the things that sink you deeper into trouble,” Jarana
said in his office near O.R. Tambo International Airport in Johannesburg.
