Crises in SOE’s : We all lose.

GROUNDING SAA BY MANAGEMENT AND THE STRIKE BY UNIONS HAS THE POTENTIAL TO COLLAPSE THE AIRLINE AND THERE WILL BE NO WINNERS

Comment by Ray McCauley

We are almost at the end of the year and this might be an opportune moment for self-reflection at a national level. Much has happened in the past 12 months but there is one particular issue that bothers me: managing our resources and public assets as a nation.

Let us start with the most immediate, the shortage of electricity supply in the country and the resultant blackouts we have seen. To say the Eskom crisis has hurt our national pride, let alone the country’s productivity, is an understatement. There was a time when the security of electricity supply in South Africa distinguished us from our neighbouring countries. Now we have been shown up to be like any other country, in particular on our own African Continent, where the erratic functioning of public utilities is the norm. The question has to be asked, what went wrong at Eskom? This is the one public asset which used to be the jewel of SA’s crown.

But Eskom is not the only entity that shows there is something wrong with how we manage our resources and public assets. The drama that has been playing out at SAA does not inspire confidence. On Friday, South African Airways (SAA) employees downed tools over wage negotiations and looming retrenchments, bringing the airline closer to the brink. SAA has said it needs R2 billion in working capital by the end of the month to stay afloat.

I must admit upfront that I’m not an aviation analyst or expert, but it is hard to comprehend how the Board and Executive Management of SAA could arrive at the decision to ground the entire airline because unions were threatening strike action. It truly baffles one’s mind that the leadership of the airline could take such a crippling decision for the entire airline instead of continuing to negotiate with the Labour movements until both parties have reached a compromise and hopefully save the airline.

It is reported that SAA is losing 52 million rands a day. It has been more than three days since SAA’s Management decided to ground all flights. One wonders, even if a solution is found quickly, whether the airline will recover from this damaging impulse, given that SAA is only surviving because of a bailout from Government.

SAA was starting to rebuild its reputation which had been badly damaged over the years by previous Boards, Management and the Ministers who were in charge. We started hearing good adverts and SAA even formed  partnerships with some Radio stations to promote the SAA brand in order to recover lost ground in the market.

With the airline being grounded and the on-going strike one wonders how much reputational damage is being caused to the airline? What kind of damage is this doing to brand SAA – both locally and internationally? Will the current efforts to turn the airline around go to waste? These are the questions which the current Board and Management of SAA must respond to.

 

The financial damage to the airline will be far-reaching and aviation analysts are already saying that the airline may not recover from this stand-off. It is already being reported that SAA has lost R200 million since the grounding of the airline. SAA has R40 billion worth of obligations that need to be settled immediately, but it has no cash in its reserves as SAA has suffered R28 billion in losses in the last 13 years.

 

Rating agencies have pointed to the airline and the power utility as key liabilities to the country’s fiscal position. The struggling airline failed to submit its audited financial statements for two successive financial years after posting a loss of R5.67 billion for the year ending March 2017. In September, the government issued a R5.5 billion bailout to cover SAA’s operational costs. National Treasury has said it would settle SAA’s loans of R9.2 billion. With the National Treasury saying they no longer have the money to bailout state-owned entities, this could mean the end of SAA.

Given the challenges we are witnessing at SAA, we must ask if the people we have entrusted with the oversight and strategic direction of these public assets are the best this country can find. The kind of appointments being made to these state-owned entities may be indicative of how respect for public assets has dwindled in our country. It is an extremely worrying trend which citizens are taking note of.

The warning I want to sound is that every government needs credibility and public trust for it to raise the funds it needs for its policies. Once that credibility and public trust are gone, a government can collapse.

In conclusion, the government must now intervene to end the impulse between the Unions and SAA Management, because whatever happens with the SAA, there will be no winners here. Let`s hope our plea will be heard.

PASTOR RAY IS THE PRESIDENT OF RHEMA FAMILY CHURCHES (RFC) AND THE CO-CHAIRPERSON OF THE NATIONAL RELIGIOUS LEADERS COUNCIL (NRLC)

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