If it seems that the SAA nightmare is a never-ending one that is because it is.

On Wednesday, the airline told the standing committee on public accounts that notwithstanding the Treasury’s R5.5bn bailout this year and its undertaking to repay R9.2bn of the airline’s debt over the next three years, it still does not have enough money to operate.

While the commercial banks to which the R9.2bn is owed had previously said they would loan SAA another R2bn to provide the working capital it needs once a repayment plan for the R9.2bn was in place, that transaction is now dependent on a full government guarantee. Furthermore, SAA told the committee that the R2bn of working capital would now be quite a bit more as trading conditions had been worse than expected.

In other words, the nightmare continues, and the amount required to fund the airline grows.

And now it faces a strike. If everyone walks out, which is possible as all three unions have obtained strike certificates, then the airline will be grounded. The board of directors estimate that it will cost R50m a day, as well as an untold sum in lost confidence of future passengers, a sudden cash-flow squeeze as suppliers insist on payment upfront and the risk of being grounded by local and international regulators.

This puts SAA in a lose-lose position. It can neither afford to pay employees the increases they are asking for — between 5,9% and 8% — nor it can it afford to have a strike. What are its options?

The best option would have been to persuade labour to settle for a deferred increase or a smaller one on the basis that the company’s continued existence, and their jobs, is under threat. This option though looks as if it has been scuppered.

Trust was already in short supply at SAA and now, after the events of the last two days — in which management sprang the news on the unions that it would retrench — it has evaporated. SAA has made the mistake of calling wolf too many times before telling unions last year that it could not pay an increase and then ending up, after the Eskom settlement, paying 7.5%.

Adding to the difficulty is that SAA has agreed to pay pilots 5.9%, something it had to do as result of a regulatory agreement they have in place.

Two unions have served the company with 48 hours notice of an intention to strike. Management and the board must now decide: will it be a settlement or a strike?

If SAA settles with employees and pays them an increase with which they are happy enough, its working capital needs will be further increased.

While it will still need to raise funding from banks — which in turn means that finance minister Tito Mboweni must guarantee those loans — it will have to raise more. The R2bn, which has already become R2bn plus, will become even bigger. The wild card will be Mboweni’s response. He has made his thoughts clear that the airline should be sold.

If SAA lets the strike proceed, it runs the risk that the airline could unravel in a disorderly fashion. Aircraft would be grounded and the economy would face further disruption.

There comes a point in every struggling company’s life when shareholders must decide where to draw the line and how best to cut their losses. The government has never quite made that decision. Instead, the Treasury grudgingly gives and the department of public enterprises returns later to beg for more.

SAA is up against the wall and that call does now have to be made. If government guarantees are not forthcoming then, strike or no strike, it is a matter of an orderly wind down.

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