South African Airways (SA, Johannesburg O.R. Tambo) has warned its 5,146 employees that it is embarking on restructuring that may lead to job losses. It could cut 944 jobs as it attempts to stem severe financial losses, it said in a statement on November 11.

The airline has launched a consultation process with its employees in line with the Labour Relations Act, which requires an employer to consult with unions and inform employees who may be affected, acting CEO Zuks Ramasia said in the statement.

“SAA’s balance sheet has historically been weak and remains so despite recent substantial capital injections from the government. Our continued losses and reliance on government guarantees to borrow money from lenders have increased the interest costs, which impacts the operating cost of the business,” she said.

“We urgently need to address the ongoing lossmaking position that has subsisted over the past years. That is why we are undergoing a restructuring process that seeks to ensure effective implementation of the accelerated Long Term Turnaround Strategy amidst the present prevailing operational challenges.”

The scope of the restructuring includes all of the carrier's divisions but excludes subsidiaries Mango Airlines (JE, Johannesburg O.R. Tambo), Air Chefs, and the MRO business SAAT.

“It is difficult to estimate the number of employees who may eventually be impacted. No final decision will be taken until the consultation process is concluded. However, it is estimated that approximately 944 employees may be affected,” Ramasia said.

Trade unions warned they would embark on a campaign of national protest and threatened to shut down the national carrier should it continue with plans to lay off so many workers.

Phakamile Hlubi, spokesperson for Numsa, the biggest single trade union in South Africa, was quoted by local media as saying: “We will be preparing workers for the mother of all strikes at SAA and all its operations nationally. We have already received a strike certificate and we have concluded the balloting process.”

In response, Deon Fredericks, South African Airways' interim chief financial officer, issued a statement on November 12 stressing: “It is our hope that our unions will grasp the full extent of the situation and engage with us in finding a constructive way going forward. [...] Let me state the reality clearly; any interruption to our operation endangers the future of our airline; our ability to deliver our strategy and threatens every job at SAA and related industries.”

South African Airways is also trying to find ZAR2 billion (USD135 million) by November 20 as short-term loans to the company expire, a source told the business news site Fin24. Quizzed about the tight deadline, SAA spokesperson Tlali Tlali told Fin24 that the sum was “always part of our requirements for working capital, so this is not new”, adding that the airline was is in process of “procuring that required amount”.

Meanwhile, at an event in Johannesburg on November 7 called Business Is An Adventure, hosted by Virgin Atlantic and asset management group Investec, entrepreneur Richard Branson said he would consider investing in South African Airways if the government approached him.

“I have great difficulty in life saying no. I’m known as Dr Yes at Virgin, so if we were approached by the South African government, we’d definitely have a look,” he said, according to The South African. He also expressed confidence in President Cyril Ramaphosa, saying: “I feel more confident investing my money in South Africa with him than with the previous [leader].”