November 19, 2019 / 2:50 PM / a month ago

Strike-hit South African Airways says state will not come to the rescue

JOHANNESBURG (Reuters) - South African Airways (SAA) resumed some regional flights on Tuesday but warned that only a deal with striking unions can keep it in the air, with no prospect of a government bailout.

Passengers board a South African Airways plane at the Port Elizabeth International Airport in the Eastern Cape province, South Africa, September 30, 2018. REUTERS/Siphiwe Sibeko/File Photo

The cash-strapped airline has cancelled hundreds of flights since the strike began on Friday and said the stoppage initially cost 50 million rand ($3.36 million) per day and was jeopardising talks with lenders. That figure has come down as some flights have resumed.

SAA, the unions and South Africa’s public enterprises minister Pravin Gordhan met on Tuesday morning. However, the airline’s acting chairwoman, Thandeka Mgoduso, said Gordhan had reiterated a warning that there is nothing in the public coffers for the airline.

“The statement is the same, there is no more money,” she told a news conference, adding that SAA would continue talks with the unions in the afternoon.

“The players who will resolve this ... are SAA and the unions, not the minister.”

She later told Reuters that the government had not made any recommendations on what the airline should do to end the strike over job cuts and wages.

SAA has not made a profit since 2011 and has relied on state bailouts for its survival.

A spokeswoman for the National Union of Metalworkers of South Africa, which called the strike alongside the South African Cabin Crew Association, could not be reached for immediate comment.

The unions threatened on Sunday to extend the strike to members at other airlines and a host of organisations across the industry.

The strike has cast doubt over SAA’s survival hopes. SAA says it needs to reduce headcount to restore profitability and is unable to raise its wage offer any further because of the company’s dire financial situation.

Acting finance chief Deon Fredericks told the conference that a multibillion-rand loan being negotiated with banks to provide working capital would, once secured, leave SAA in a much better position to cope with the impact of the strike.

If this isn’t in place by February, he later told Reuters, SAA would look for other lenders.

The government is still looking for an equity partner for the airline, but SAA must stabilise first and the entire process could take at least two years, he added.

In the meantime, other executives said that a few hundred workers had returned to work despite the strike, enabling SAA to resume some regional flights. International flights had already resumed but domestic flights remain grounded.

Reporting by Tanisha Heiberg and Naledi Mashishi; Writing by Emma Rumney; Editing by Louise Heavens and David Goodman

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