Sir OFTR, you are right about SAA wanting to place pilots on contract, but not because they don't need them. In fact, SAA is desperately short of pilots and over the December holiday period SAA could not crew over 200 flights that would have been in the system. Hence destinations like George were not serviced by SAA.
The true story, and not rumour, is that SAA signed an agreement to increase the retirement age for pilots at SAA to 63 as of September 2005. Part of this agreement included a provision that for the first 3 years, pilots over 60 could either fly as narrow-body Captains or as wide-body FO's. In addition, the agreement stipulated that contracts and 'part-time work for part-time pay' would be introduced to absorb the impact of keeping pilots over 60. This provision was mainly for the protection of FO and junior Captain advancement. If these provisions did not absorb the impact of the over 60 pilots, then they would be carried surplus to requirement.
Being as incompetent as SAA management is, they did not implement any contracts or part-time work and, because most of the over 60 pilots opted to move to the right seat on the wide-body fleets, they started to use these pilots and most senior FO's as both P2 and P3 pilots. By doing this, they did not hold up many commands but they did start to absorb the cost of the over 60 pilots by using them as an alternative to new-hire pilots i.e. P3 flying. SAAPA, the SAA pilot's union, filed a dispute with SAA over their non-compliance with the retirement age agreement and SAA then sat down to work out what the surplus to requirement clause amounted to and landed up being short of around 82 pilots, specifically new-hire pilots. Part of the dispute filed by SAAPA includes enforcing the contracts and part-time work provision and hence SAA's desire to find contracts for its more senior pilots. In addition, by being forced to carry all of the over 60 pilots surplus, and at the rate pilots at SAA are going over 60, SAA will be lumbered with a surplus salary bill of well over R50 million per year. However, for every pilot that SAA places on contract or for every two on part-time work, SAA can then reduce their surplus to requirement pilot total by that number of pilots. It is therefore very much in SAA's interest to place as many pilots on contract or part-time work as possible.