Johannesburg | Tuesday
SOUTH African Airways has begun a series of cost-cutting measures, including the streamlining of the airline’s managers by between 20 to 30%, the beleaguered airline’s CEO has announced.
Addressing a management meeting attended by more than 500 managers, President and CEO, Andre Viljoen, said the airline was ”cleaning up its management structure” and introducing cost cutting measures. The airline industry has generally been experiencing major challenges. These were exacerbated by the September 11 attack on American business and political symbols.
”After September 11 airline values across the world have been decimated by up to 60 %. There is a possibility of many of them going insolvent. There have been worldwide layoffs totalling up to 200 000,” said Viljoen.
”There are significant weaknesses within SAA such as the burgeoning management structure, inconsistent passenger service, lack of passion and ownership by some SAA employees and increasing costs,” added Viljoen.
”Between May 1999 and October 2001, SAA management structure jumped from 480 to 668 — a 39% increase. For us to survive, we have to streamline the management structure, eliminate duplication and non-value adding functions, including the reinforcement of accountability and responsibility.
”To achieve that, we have to reduce our management numbers by between 20 to 30%. In all of these the Labour Relations Act will be followed to the letter,” said Viljoen.
Other cost-cutting measures include:
Replacing all company cars with an allowance scheme;
Company cell phones to only to be used if the job requires it;
Secretaries to be shared among managers;
Duty travel to be undertaken only when necessary;
Foreign travel allowances to be reduced from $90 to $70 per day;
All new employment has been frozen; and
Restrictions on all offsite retreats for team-building
Performance bonuses to be paid only if SAA meets headline profit of R50m
However, Viljoen said it was not all doom and gloom adding that this was not a retrenchment programme, but a ”management clean-up”.
”SAA is not about to go bust. We have a very strong balance sheet, R2-billion in cash, but this can be eroded fast. The European routes still carry many passengers, but the numbers are declining. We should attract premier passengers back.
”Domestic travel is also starting to decline and we must get premium clients, such as corporate clients back and improve Voyager, our frequent flyer programme. We must also look at Africa for further growth, as other airlines are scrambling for this potential ”honeypot”, said Viljoen. – Sapa