South African Airways (SAA) is offering voluntary severance packages to its 602 managers as part of its effort to turn the business around, the company announced in Johannesburg on Friday.
Chief executive Khaya Ngqula announced this at a press conference at Johannesburg International airport on Friday, 100 days after taking office at the troubled national carrier.
SAA suffered heavily during the 2003/04 financial year in a R6-billion hedging loss when the government had to issue a R3,5-billion guarantee to lenders.
Management staff will be offered three weeks’ pay for every year served, he said.
”We need to save R1,6-billion in the next 18 months. To do this, we need to realign departments, and stop duplication across the board.
”Packages will be designed to mostly benefit people wanting career changes or to start their own businesses,” he said.
Ngqula added that ”head hunting” will also take place.
He said no retrenchments are planned for the meantime, but emphasised that the variables of exchange rates and oil prices are beyond the airline’s control.
He said that SAA will be happy with 50% of its management taking the severance offer, which will put its management profile in line with ratios of airlines such as Cathay Pacific and Singapore Airlines.
The decision how to make SAA a ”robust, reliable airline” has been made in consultation with unions, staff and shareholders, he said.
”In the next few weeks, the operation will go ahead in earnest as we do the groundwork to make it successful,” he said.
‘Markets of the future’
He said the airline has earmarked Africa, the Middle East, South America, south-west Asia and south-east Asia as ”the markets of the future” and that SAA will focus on a south-south strategy.
From February 5, connections to India will increase from four to six times a week; from March 5 the three weekly connections to Paris will be upped to seven.
Through the Star Alliance network, which SAA became party to in December, the airline will also have access to Washington as a new port of entry into North America through connections via Accra, Ghana, and Dakar, Senegal, he said.
On the domestic front, which Ngqula said accounts for 49% of revenue, SAA will continue to market itself aggressively in the low-cost market.
Ngqula said SAA’s acquisition of the Airbus A380 will depend on affordability, but he hopes it can be acquired in the next 18 months.
On the topic of SAA unbundling from Transnet, Ngqula said the process is ”on course” with a manager on the portfolio who reports to both himself and Transnet CEO Maria Ramos. The target date for completion is in April or May next year.
However, cash flow will have to be improved to raise between R3-billion and R4-billion for recapitalisation, he said. — Sapa