Top SAA brass are taking pay cuts, as bleak situation at airline unfolds
South African Airways’ (SAA’s) financial situation is so precarious that the company’s executive are taking pay cuts and GMs will not receive increases‚ Parliament has heard.
Finance Minister Malusi Gigaba and the management of SAA painted a bleak picture of SAA’s finances for the standing committee on finance.
The airline recorded an almost R1.4bn loss in the first quarter against a budgeted loss of R813m‚ and faces the prospect of more than R6bn in loans maturing at the end of September.
The airline has had to negotiate with more than 20 suppliers to pay its July invoices in instalments, as it battles a liquidity crisis.
He said the move by the executive to take a 5% pay cut was "commendable"‚ but more needed to be done to "demonstrate to South Africans they are correct to give them their support".
Newly appointed CEO Vuyani Jarana will have his work cut out for him. The airline has outlined a bold turnaround strategy it hopes will lead to a profit in the 2019-20 financial year.
Gigaba said Jarana had applied for the position and had not been head-hunted‚ adding that the new chief executive was "not naive about the enormity of the task" facing him.
Much of the turn-around strategy outlined in the presentation relies on a R13bn capital injection over the next three years.
Gigaba would not be drawn on what his financial assistance plan for the airline would entail‚ but said an announcement would be made in his medium-term budget policy statement in October.
He added that the Treasury would not "throw money into a bottomless pit" or "babysit" the airline.
Acting CEO Musa Zwane told the committee that the airline hoped to save about R900m through "route rationalisation"‚ which would see some routes being cancelled immediately. They hoped to free up another R520m by the end of the year through cost optimisation strategies such as fuel management and retiring of five of the airline’s older‚ wide-body aircraft.
Gigaba addressed concerns by the EFF’s Floyd Shivambu that the Treasury would sell off government’s stake in Telkom to bail out the airline‚ the same way it had sold its Vodacom shares to free up capital to fund Eskom: "I have not said we will sell our shares in Telkom. We will look at where we will find the funding for a recapitalisation."
He said they were looking at "all options for funding" and this could possibly include the Public Investment Corporation.
Committee chairperson Yunus Carrim said the committee was "sceptical" of the promises being made‚ given there had been little improvement at the airline since 2015.
"What has changed since 2015?" Carrim asked.