Vuyani Jarana. Picture: STEPHANIE LLOYD/DAILY DISPATCH
Vuyani Jarana. Picture: STEPHANIE LLOYD/DAILY DISPATCH

Six months into the job of running loss-making South African Airways, CEO Vuyani Jarana is mapping out a punishing austerity plan.

Jarana, who faces the daunting task of turning around the national carrier, said layoffs and other cuts were unavoidable as he contended with a draining cost-to-income ratio of 108%.

"SAA cannot carry the same workforce, whether it is pilots, cabin crew or administration," he said. "We have to make some tough decisions to save the airline. There cannot be 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 SAA 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 about 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.

On Monday, SAA catering subsidiary Air Chefs announced it planned to retrench 118 workers in what could be the start of a more profound restructure of the airline’s entire workforce.

After several years of losses, Air Chefs returned to profitability in the 2016-17 financial year for the first time since 2010. Revenue improved by 11% to R493m from the previous year’s R444m due to higher volumes and pricing on SAA’s international routes as well as increases in revenue from airport lounges. Employee costs were also reduced due to head count rationalisation and a change in the shift system.

The National Union of Metalworkers of SA confirmed in a statement on Monday that it had received notice of the retrenchment of 118 of Air Chef’s 1,200-strong workforce, which it would oppose.

The union said any discussion regarding retrenchments should take place within the SAA group as a whole. Restructuring should also be undertaken at a group level.

"We condemn this opportunistic act by Air Chefs. SAA is in the process of implementing its turnaround strategy, which affects all companies in the group, including the airline catering company," said Numsa national spokeswoman Phakamile Hlubi-Majola.

She said the Air Chefs board and management "did not consult the union when it made the decision to retrench workers" and it was "strange that the board … is not waiting for SAA to implement the turnaround strategy before resorting to the drastic step of shedding jobs".

Hlubi-Majola said Numsa was engaging with Jarana on the planned job cuts, which will also be discussed at the Commission for Conciliation, Mediation and Arbitration later in June.

SAA spokesman Tlali Tlali said Air Chefs, like all other entities in the group, was implementing initiatives in the context of the broader turnaround plan.

He emphasised that SAA had not made any firm decision on the exact number of people to be retrenched. This would depend on consultations with labour.

With Reuters

ensorl@businesslive.co.za

Please sign in or register to comment.