It is an old joke in South African aviation that; “Many Rands make flight work.” Yet SAA is expected to achieve the impossible – to stay in the air without money.
The Minister of No Money, Tito Mboweni, has made it clear – there are no more Rands for SAA. Yet SAA’s unions have persuaded The Minister of Mismanaged State-Owned Enterprises Pravin Gordhan to keep the airline going. He buckled to pressure and promised no retrenchments, even though at time of writing, no one will be getting their salaries for May.
Around the world strong, well managed airlines have been grounded by the loss of revenue from the Covid-19 pandemic. SAA is in the stupid corner and should have been closed down at the first sign of Covid – if not years earlier. But in South Africa, there is an even stronger force than money.
SAA faces a particularly dangerous and dark force – a pervasive sense of entitlement. Like a war in the heavens, there is an epic battle between two opposing powers. Either the forces of rational economics win the battle and ground the airline, or the plaintive pleadings of labour succeed in keeping the airline flying, like a hobo – without visible means of support. Abused taxpayers have invested R30 billion so far into this battle of labour against economics. which is one of the reasons SAA holds an extraordinary fascination for us.
The battle is epic. The airline industry has shrunk the world. It crams hundreds of people into paper thin aluminium tubes and carries them through the sky at 1000 km/h with amazing safety. Visiting friends and relatives on cheap tickets from the low-cost carriers has made it possible to visit Aunt Ethel halfway across the country for her birthday.
These are just some of many reasons why tin-pot African governments cling to their ‘flag carrier’ airlines. Flag carriers have become an anachronism – valued only by banana republics in the misguided hope that they may be noticed on the world stage. There is no longer a ‘jet-set’ – just harassed travellers. The notion of the world admiring your flag on the tail of your airliners is absurd. You don’t get to see the tail of the airline you are flying on when you walk down an airbridge. And you may loyally book a flight on your home airline, only to discover that you are flying on an entirely different airline under a code share arrangement.
Yet the South African government persists in investing taxpayers’ money into its flag carrier. The arrival of the Covid-19 pandemic should have been the final blow. Yet, absurdly, Covid-19 has been a blessing for SAA. While the rest of the world’s airlines are on the ropes, SAA has been saved by the disease.
The Covid-19 lockdown forced SAA to stop flying its schedule, and thus to stop haemorrhaging money on almost every route. And now there is the mouth-watering prospect of R500 billion for Covid relief out there for the taking. And, if that’s not enough, there is R100 billion available for job protection. So, what’s another R10 billion to keep SAA going?
With the current non-payment of salaries, its previously untouchable employees have finally realised that the game might be over. This has united otherwise fractious unions into what can only be described as a magnificent fight back against Mboweni’s “No more money” assertion.
The thing is, to the unions there is always lots of money – SAA has long proven that you just have to shout loud enough to get more than your fair share. Thus, the unions made it possible for SAA to defy economic gravity, enabling SAA to float in a splendid bubble of unreality.
What is also remarkable is that the unions have managed what was previously thought impossible, and that was to form a united labour aristocracy in the face of a common enemy – economic reality. The tensions in labour run deep. It was not so long ago that Transport and Allied Workers’ Union general secretary Zenzo Mahlangu called SAA pilots ‘glorified bus drivers’ – the ultimate insult. Now the unions have united to form a happy leadership compact. They say they even have a business plan on how to run the airline.
Allow me to digress briefly into the subject of business plans. In another unholy alliance, the unions and Minister Gordhan teamed up to hammer the business rescue practitioners (BRPs) over their ‘failure to produce a plan’. I believe this is unfair. The BRPs had until the end of January to produce a plan. They presented four scenarios to the government as the shareholder. However, government threw all the scenarios out, because Mboweni didn’t have the required R7.7 billion and Gordhan wasn’t prepared to countenance 66% job cuts. So, it was back to the drawing board for the BRPs.
Meanwhile the private funders who had coughed up another R2 billion, (which government had failed to match as promised) insisted on expensive New York consultants; Alvarez & Marsal. Then the Covid-19 lockdown arrived, and it became impossible to plan at all. Yet Gordhan and the unions now use this nonproduction of a plan to claim that the BRPs have failed to deliver anything of value. (The BRPs plan is due at the end of May).
With 20-20 hindsight, the BRPs were never going to win against labour. A business rescue process is about hard economic realities – any one of which will prick labour’s bubble.
The question must be: how long can this magical defying of gravity continue? I’m reminded of Margaret Thatcher’s famous comment; “The trouble with socialism is that eventually you run out of other people’s money.” Unless government does the unthinkable and uses some of the R500 billion it has conjured out of thin air for Covid-19 relief to support SAA, then the hard reality must be that the government has already run out of other people’s money.
No matter what plan may be produced, there will be no quick fix towards a sustainable airline, especially with even the strongest airlines on their knees, begging for government support. IATA reckons that it will take at least 18 months before airlines can begin to operate sustainably. Meanwhile SAA has been all but wiped out, with the return of many of its leased aircraft and a widespread loss of confidence in the airline.
The loss of confidence means that few if any of the travel agencies, which book high-value business flights, will risk their clients’ money on forward bookings. This is what brought SAA to its knees in January, as fallout from the culpably stupid and short-sighted NUMSA and cabin crew strike. These unions just didn’t get the fact that the airline was already on its knees as – you guessed it – there was no more money. A classic case of biting the hand that feeds you.
What little goodwill there is to keep SAA flying was dealt a further blow by the appalling self-interest, demanded without a blush, by a privileged group who claim to be entitled to special treatment. The case in point is an open letter written by a group calling themselves ‘African Pilots’. This group earned the loathing of the rest of united labour by demanding special treatment. Their claim drove a wedge into the heart of the otherwise extraordinary unification achieved by the unions. It also reminded many how nauseating this sense of entitlement has become. It is this entitlement that enabled cronies to appoint incompetent managers at all levels of all state-owned enterprises and supported the Preferential Procurement Policy which is arguably the single biggest factor behind the destruction of state-owned enterprises.
But the thing is – entitlement has no place in airlines. If flying is to be safe, the highest level of technical standards and competence must make airlines beyond the reach of any affirmative action policies which promote employees based on race above competence.
What those who claim special treatment fail to understand is that the moment a group asks for special treatment, it is admitting that it is incapable of competing on a level playing field. Whether this is due to historical imbalances is irrelevant. The reality is that passengers place their lives with blind trust in the hands of pilots. If there is any question as to whether the captain of the airliner was appointed, not on pure ability, but because he had been previously disadvantaged, then the travelling public’s confidence in the airline’s safety will be undermined – recurrent proficiency checks be damned. A loss of confidence will provide a perfect excuse for those travellers, who are already angry at the airline for wasting their tax money, to move their bookings elsewhere.
This sense of entitlement has no place in the hard realities of running a successful, sustainable, airline. The message that must be taken from this is that, if yet another attempt is to be made to keep SAA going, then wheedling children undermining grown-up economics need to be stomped out. Airlines have massive capital costs and paper-thin margins. Any inefficiencies or distortions in the drive for a profit driven bottom line will be insurmountable for ‘a new SAA V2.0’.