A confrontation between the management and labour at SAA is coming to a head fast. So far, the management has done everything wrong.
On Monday afternoon, SAA abruptly announced it will cut 950 jobs. While unions had been aware that restructuring the airline was a key pillar of the turnaround strategy, the puzzling thing was that they had sat together with the management that very morning to discuss wages, but no mention was made of the Section 189 Labour Relations Act notice that was issued later in the day.
CFO Deon Fredericks said at a media conference on Tuesday this was because another meeting, titled “Organisational Restructuring”, was called later in the day.
“The recognised unions did not attend,” he said.
Union representatives say they were not informed, and besides, the strict rules about how much notice must be given for a meeting were not applied.
Any trust there may have been between the parties has now evaporated. This is not a good basis on which to negotiate a deal in an environment that is politically charged. The SA Cabin Crew Association, Numsa and the National Transport Movement (NTM) have interpreted the timing of the announcement as a cynical attempt to frighten off workers from pursuing their wage demands. NTM ballots workers for a strike on Wednesday.
Staff complement
That SAA needs to cut jobs as one of the steps to get itself into a sustainable position is very likely correct. During the era of state capture, the airline’s management ranks swelled as additional people were employed at inflated salaries. The long-term turnaround plan in all its iterations has found the company to be overstaffed. Former CEO Vuyani Jarana already encouraged people to take early retirement.
SAA has moreover cut its routes by 20% since the turnaround began while the staff complement, apart from pilots who have been loaned out, has remained the same.
But even with the steps that have already been taken — scrapping of unprofitable routes, more efficient aircraft, the easing of bottlenecks at SAA Technical — SAA still burns R500m in cash a month, Treasury official Tshepiso Moahloli told Business Day in October. It is envisaged in the airline’s turnaround strategy that it will break even by 2021.
The management’s hands were largely tied on the pilots’ issue. Nonetheless, it has now placed them in an impossible bind regarding the rest of the workforce
But to get there does require that all the pillars are put in place, says Fredericks.
As if springing the job-cut surprise on trade unions in a hastily called meeting wasn’t enough to ruin its credibility, SAA also has another credibility problem lurking in the wings.
Earlier in 2019, it implemented a 5.9% wage deal with pilots. Yet at the same time, it was asking its employees in the bargaining unit — cabin crew, customer service agents and the management — to settle for 0%.
This anomaly has a history that requires unravelling. The management’s hands were largely tied on the pilots’ issue. Nonetheless, it has now placed them in an impossible bind regarding the rest of the workforce.
Pilot conditions of service are part of a 10-year agreement signed in 2010. Such long-term agreements with pilots are common in the airline industry.
Independent consultants benchmark the wage component of the agreement against pilots globally. The consultants also recommend an annual increase based on a benchmark assessment with other executives in the economy. That amount was very comfortably above inflation at 5.9%.
The SAA management engaged with the SAA Pilots Association (Saapa) to forego the increase on the grounds that the company could not afford it. The pilots agreed to engage, but before this could take place, says Saapa chair Grant Back, SAA informed them that it intended to challenge the 2010 agreement. Saapa then made use of the remedy in the agreement, which is to refer the matter to arbitration.
Pilot negotiations
The arbitrator ruled in favour of the pilots. SAA asked Saapa if they could defer some of the increase and pay it over the year. When Saapa responded by saying they would do so if the 10 year agreement was extended for another five years , SAA refused and implemented the agreement. The pilots were paid and given their back pay.
In the past week, Back says he was called to a meeting with the department of public enterprises and senior SAA management and asked that pilots voluntarily pay back the money and revert to their previous level of remuneration. Pilots have not taken the suggestion well, he says, and have asked for another meeting with the management that is yet to be held.
The message from the department of public enterprises and SAA management to employees is that unless all of them do their bit to save the airline they will all go down together. This is the same message finance minister Tito Mboweni hopes to convey to public service workers in an attempt to lop R50bn off the budget to avoid SA’s debt spinning out of control.
At SAA, it is not a message to which employees are receptive. From customer service assistants at the counters all the way to pilots at the top, employees have little faith that either the board or management have the ability to turn the airline around.
In that context, it is not hard to see why the story that “we will all sink or swim together” is not gaining any traction. SAA employees, like their counterparts at Eskom and in the public service, are not in the mood to take the pain for previous management failures and escapades.
Clarification: November 13
A previous version of the story said that when SAA asked Saapa if they could defer some of the increase and pay it over the year, Saapa asked for more compensation for doing so. This has been clarified in the story to explain that Saapa said they would do so if the agreement was extended for another five years.
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