Coronavirus: South Africa expects economy to tank as it grapples with pandemic
South Africa is bracing for a deep recession amid the COVID-19 outbreak, and is engaging with domestic and international financiers to mount an adequate response.
By Xolisa Phillip, in Johannesburg
South African Airways’ (SAA’s) worker downsizing exercise remains on track, despite the country being under lockdown, The Africa Report has learned.
“Yes, the section 189 process is still underway, albeit virtually. And that is not an easy task considering that we are negotiating with about seven unions. We have to ensure we engage meaningfully with everyone,” confirmed a source who is close to the negotiations but is not authorised to speak to the media.
In early March, the national carrier announced it would cut its workforce using provisions under section 189 of South Africa’s labour law. In terms of the section, companies are permitted to downsize workers for operational reasons. But companies can only do so after constructive consultation with those who will be affected.
Previously, The Africa Report reported about the airline entering into business rescue and retrenchments being an inevitable outcome because of SAA’s massive fixed costs.
“The business-rescue practitioners are adamant that the process goes ahead. Admittedly, SAA is facing a double-whammy: the business rescue and the uncertainty brought on by the COVID-19 crisis,” said the source.
However, the business-rescue practitioners are tight-lipped about the consultation process because of the sensitivity of the negotiations.
READ MORE: South Africa: Comair vows to go after SAA settlement
A total 4,708 employees –SAA’s permanent members of staff – will be affected. But employees at SAA subsidiaries, including low-cost airline Mango, will largely be unaffected.
In recent years, SAA has been the recipient of successive state bailouts without much evidence of a turnaround. Instead, the state-owned carrier’s troubles have worsened. In a further sign of its woes, the airline has not filed its financial statements, as required by law, for the past two years.
Since mid-March, the flagship carrier has grounded its fleet of passenger aircraft to abide by the country’s 21-day lockdown, which kicked in at midnight on 26 March. This means it ceased operating domestic, regional and international flights.
Thursday 2 April, the airline announced it was in negotiations with several embassies about operating chartered flights to repatriate foreign nationals. On Friday and Saturday, SAA operated two flights – Johannesburg to Munich and Cape Town to Frankfurt – to repatriate German citizens.
READ MORE: Coronavirus: South Africa’s Ramaphosa mounts economic relief efforts
“A series of repatriation flights to take German citizens to their country will operate on specific dates throughout the month. The flights operating to Germany next week will bring South African citizens back home,” the airline said.
On Monday 6 April, the airline was scheduled to operate another repatriation charter flight to Brazil. “That aircraft will bring back home South African citizens who may be stranded in Brazil.”
The unfolding COVID-19 crisis has also stimulated demand for SAA’s cargo division.
On 6 April, the division used a passenger plane, an Airbus A340-600, to transport cargo for the first time in its history. The load of essential goods and laboratory supplies flew out from Johannesburg to Frankfurt.
On Friday, SAA’s cargo division will operate a flight from Johannesburg to Guangzhou to collect and deliver medical supplies.
“SAA cargo has stepped up as a trade facilitator and a solution provider to sustain supply chains to and from various countries. The solution is provided on a charter basis at the request of our customers, who are producers and suppliers of essential cargo,” the airline said.
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