Mboweni must commit not to bailout SAA after agreeing to R72 million wage increases they cannot afford

25 November 2019

The Democratic Alliance (DA) notes that South African Airways (SAA) is finally back on its full flight schedule, but only after signing a 5.9% wage increase with workers - which they cannot afford. SAA Spokesperson, Tlali Tlali, has acknowledged that this would cost R72 million a year.

The leadership structures of SAA know they cannot and will not be able to fulfill these wage promises, and the Democratic Alliance (DA) fears that the taxpayer will once again be forced to pay the price for SAA’s dismal mismanagement in the form of a bailout.

The DA concurs wholeheartedly with Minister of Finance, Tito Mboweni, we cannot, aid SAA in its poor decision making, by extending another bailout from National Government. To do so, would only condemn taxpayers to continue paying the price for the ANC’s ineptly run state-owned entities (SOEs).

To make matters worse, SAA has promised employees an increase effective from February 2020, with backdated payments to April 2019 – subject to the availability of funds. It is almost comical, if it were not quite so tragic, that an insolvent public enterprise would even consider honouring such an onerous financial commitment.

The time has come for National Government to seriously consider South African Airways’ (SAA) future, as unions, strikes, grounded planes and now wage increases continue to threaten, and place our already ailing economy under further distress. SAA lost over an estimated R50 million per day during the last strike – which is now to be compounded by wages it cannot afford.

The DA is of the strong view that the airline must be placed under business rescue, in order to mitigate any further loss of revenue and to ensure that the entity is stabilised - if not business rescue, the only viable option would be the partial or full privatisation of SAA.

South Africans derive very little benefit from SAA, which is clearly in desperate need of drastic measures. It is time for National Government to start making tough decisions with regards to the future of SAA.

Issued by Ghaleb Cachalia, DA Spokesperson on Public Enterprises, 25 November 2019