Amid looming retrenchments, unions demand transparency in sale of South Africa’s national airline

The sale of the restructured South Africa Airways (SAA) to a private consortium at an undisclosed price may provoke further labor unrest. The workers are already angry at the impending dismissal of 225 more workers

March 07, 2022 by Pavan Kulkarni
South African Airlines sale
(Photo: NUMSA/Twitter)

The majority of the unions at the South African Airways (SAA) have decided to take the legal route to force the Department of Public Enterprises (DPE) to disclose the details of the sale of 51% ownership of the state-owned enterprise (SOE) to Takatso Consortium at an undisclosed price. 

“We should not have to fight for this information. This entire process should have been completely transparent and should have played out in the parliament because we are talking about the sale of a state-owned entity,” Phakamile Hlubi Majola, spokesperson of the National Union of Metalworkers of South Africa (NUMSA), told Peoples Dispatch

“We need to know how much ownership the government plans to keep in the long-run. Will that ownership be permanent or do they plan to cede their ownership at a later stage,” she said, adding that the DPE has been refusing to disclose any information. “So now we are forced to go through a legal process.. to resort to attorneys to get information that should have been in the public domain.”

This lack of transparency has led to anxiety among the workers who have borne the brunt of years of mismanagement, corruption, and even ‘sabotage’ at the highest levels of management under the former board, as is well-documented in the Zondo Commission’s report.

Unions had already been highlighting that the national airlines was bleeding financially as a result of corrupt contracts for outsourcing operations to private providers at inflated prices. Unions point out that these contracts could have been internally undertaken more efficiently.

As SAA was brought to the brink of financial collapse, it was entered into a business rescue process in December 2019, out of which it emerged only in April 2021. The restructuring this entailed required the workers to painfully tighten their belts.  

“After more than 3000 jobs were shed last year as part of restructuring, those who remain lost their benefits and conditions of employment,” said NUMSA and the South African Cabin Crew Association (SACCA) in a joint statement on March 1, when SAA workers picketed the office of the DPE.

“Workers’ salary packages were cut by 35% and benefits like medical aid, meal, and housing allowances as well as pension funds were taken away. But the packages that management and specialists receive are generous and they have not made any sacrifices,” the statement added.

“They have taken bread away from our mouths, we can no longer afford to come to work, we cannot afford to put food on our table,” read a petition to the SAA management by NUMSA and SACCA in October 2021, a month before SAA was set to fly its planes again.  

“We have lost our houses, we can no longer afford to make a living from our jobs, but for the executives and management that made decisions which led to the collapse of the old airline, their salaries have increased. They are not struggling like us,” the petition added.

Privatization of SAA

After SAA was thus resuscitated by transferring the costs on to the workers, the long-standing agenda of privatization, which the unions had fought off for years, reared its head once again. In June 2021, the government announced the Takatso consortium as its preferred private equity partner. 

This consortium comprises two entities – Global Airways, a Johannesburg-based enterprise which owns the newly-formed domestic airline Lift, and private equity firm Harith General Partners, owned by former finance minister Jabulani Moleketi.

While the sale was completed on February 24, 2022, the price at which it was sold remains undisclosed. Available publicly is only a comment by Takatso in June 2021, indicating its plan to inject R3 billion over three years. SAA’s historic debt of R14 billion will fall on the public purse even as the entity is being privatized. 

Details regarding the “standards or measurements they used to decide” that Takatso was the best private equity partner available in the market remains unknown, said Majola. “And when we ask questions, they refuse to answer.” 

225 more workers to be dismissed

Any legal tussle that might ensue over this sale will open another front potentially leading to further labor unrest, which is already fomenting over the impending dismissal of 225 more workers. These were part of the jobs that the unions had managed to save during the SAA restructuring by securing an agreement to place them on a Training Lay off Scheme (TLS).  

As per the agreement, the Commission for Conciliation, Mediation and Arbitration (CCMA), a dispute resolution body, was to pay these workers a stipend for a period of one year. During this period, the Transport Education Training Authority (TETA) was to provide training to upskill these workers, whereupon they were to be reabsorbed into SAA. 

However, only 32 of them have been appointed on a contractual basis. On February 28, the SAA management announced that the remaining will have to be dismissed. 

Among them is SACCA member Minki Van Niekerk. Reading out the memorandum to the DPE from the picket line outside its office on March 1, she said “SAA management has done the unthinkable by firing 225 of us yesterday,” and broke into tears. She called for the “replacement of the entire management and its executive” to the cheers of other workers.  

“[T]hey failed SAA version1 and now they are failing SAA version 2,” she said, adding, “You took our salaries, our benefits, our jobs, and promised to upskill us for the job market and train us in the critical skills required.. The minister (of public enterprises), Mr. Pravin Gordhan, sat with our leaders.. and promised this TLS plan. And we had hoped for a better tomorrow. We are asking the minister to instruct the SAA management to enforce his plan.”

The management maintains that it is unable to hold its end of the bargain because the CCMA had not paid the stipends to the workers during the year on TLS, the cost of which had to be borne by SAA. Further, TETA did not commence the training, as a result of which the required upskilling did not take place.

Unions contested this in their joint statement that day, stating that “SAA is not telling the whole story. CCMA was unable to provide a stipend because the condition for any entity to receive financial support from CCMA on TLS is that audited financial statements are needed. SAA has not provided financial statements for three consecutive years which makes the board delinquent!”

The statement further clarified that TETA had “set aside funds to provide training for free and it was going to manage the entire process. But SAA wanted TETA to pay money to it directly so that it could provide the training, but TETA refused… The funding was conditional on TETA doing the training, but SAA refused to cooperate. SAA wanted to control the process and that is why the entire project collapsed.”

“This is massive corruption led by Minister Pravin Gordhan”

While the workers who chose TLS to upskill and continue service at SAA, instead of opting for the Voluntary Severance Package (VSP), have been left in the lurch, some managers who had already accepted VSPs have been re-hired.

“Accepting a VSP means you have signed away your rights and you may not come back… The VSP’s were funded through tax payer money. If you are re-employed at SAA after taking the VSP, this is a form of corruption,” the unions said, calling for an investigation into the HR department.

“It makes no sense that there are 103 managers and 122 specialists managing 700 staff. This is an example of bloated management who are benefiting whilst ordinary workers are suffering on low pay and forced to work without benefits.”

Amidst the piling discontent among workers, the refusal to disclose the details of the sale of the majority of the airlines, at a time when the trust in management has hit rock bottom, has provoked suspicions of continued graft.

“This is massive corruption led by Minister Pravin Gordhan,” unions accused.” We keep being told about state capture of SOE’s under the Zuma era, but it is very clear to us that corruption is still rampant under this Ramaphosa administration.” 

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