SAA, the chop has started
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Tough luck . . . . its never going to change
Everyone knows that where there is Government involvement, there will always be an issue of mis-spent tax money. 
I know that almost every employee at SAA would rather have a profitable airline run by competent management than be in the position we find ourselves in presently.
I acknowledge that everyone has a right to express opinions on this forum but no matter how many messages detractors post and no matter how many times the staff at SAA want to pull their hair out in frustration at the incompetence of the managers and executives
, we will be having this same conversation again, and again, and again . . . . .
Its time to get over it.
I know that almost every employee at SAA would rather have a profitable airline run by competent management than be in the position we find ourselves in presently.
I acknowledge that everyone has a right to express opinions on this forum but no matter how many messages detractors post and no matter how many times the staff at SAA want to pull their hair out in frustration at the incompetence of the managers and executives
, we will be having this same conversation again, and again, and again . . . . .Its time to get over it.
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Far be it from me to interrupt an amusing willy-waving contest about who’s the best pilot and who works hardest, but something about the initial announcement happened to catch my eye.
Cabin crew: 433
Pilots: 17
Or, put another way, each plane flown by 2 pilots carries 50 cabin crew to look after however many pax can cram themselves into the few remaining seats. Does this announcement then mean
Cabin crew: 433
Pilots: 17
Or, put another way, each plane flown by 2 pilots carries 50 cabin crew to look after however many pax can cram themselves into the few remaining seats. Does this announcement then mean
- Massive savings will be realized through rationalization of the overstaffed cabin crew department?
- Someone has blundered and crisis looms as flights are cancelled for lack of cabin crew?
- An artificially created shortage will soon be filled by 400 previously disadvantaged candidates?
- This is only the first bunch of retrenchments and the next bunch will include several hundred pilots?
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Don't read into anything Buitenzorg because you are way off the mark. 17 pilots refers to the number of Durban based pilots who will be affected by the closure of the Durban base, NOT 17 pilots being retrenched!
These pilots will simply be absorbed into the Johannesburg base. SAA is very top-heavy with pilots but overall there is a huge shortage, specifically of entry level pilots for P3 operations. I just ran into a pilot who made over R50,000 in overtime for the three month period ending June 2007.
These pilots will simply be absorbed into the Johannesburg base. SAA is very top-heavy with pilots but overall there is a huge shortage, specifically of entry level pilots for P3 operations. I just ran into a pilot who made over R50,000 in overtime for the three month period ending June 2007.
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Privatise SAA to stop needlessly squandering scarce resources
To make the country’s airline industry more responsive to market forces.
Terry Markman*
04 Aug 2007 08:08
SAA should be privatised to make the country’s airline industry more responsive to market forces. This will create a more stable environment and encourage more airlines to enter the market.
The management of a privatised SAA and the private airlines will be able to focus on running their businesses rather than face political issues or spend senior management time dealing with the Competition Commission. Government will become the referee and not be an operator and regulator at the same time. Unfair competition will be eliminated as SAA, unlike the private sector, has its losses paid by taxpayers.
Increased competition from international airlines would benefit all passengers, the tourism industry, and employment in tourism. Just as passengers have benefited from deregulation of domestic air transport, so will international passengers benefit from more competition from international airlines.
The SA airline industry has undergone a major change, probably the biggest change in its 70-year existence, since deregulation of the domestic airline business in the early 90’s. At that stage it was estimated that SAA had more than 95% of the domestic airline market. Since then SAA has lost market share to airlines such as Comair (which in 1990 had one or two per cent of the market), and other newcomers, which are now estimated to have between 50% and 55% of the domestic airline market.
Passengers have benefited enormously from the increase in competition arising out of the deregulation. Prices of air travel have reduced dramatically and frequencies have improved. More passengers than ever before are flying, many of whom could not afford to do so before the deregulation occurred.
At the time of deregulation it seemed likely that SAA privatisation would level out the playing fields. In 1999, 20% was sold to strategic equity partner Swiss Air for R1,4bn, giving SAA a total value of R7bn. When Swiss Air went bankrupt the SA government bought back the shares in 2002 for R382m. While this might appear to reflect a ‘profit’ of R1bn, it really meant that the value of SAA had declined by about 72% - from R7bn to R1,9bn.
SAA’s operating figures over the past six years do not reflect a healthy airline. It is not easy to obtain consistent figures as every year the method of disclosure is changed; the figures invariably incorporate the sale and leaseback of aircraft, or exchange gains, or other revaluations to reflect the most positive situation. In fact, SAA has lost billions of rand. This is in stark contrast to Comair, which has made a profit every year since 1946 when it commenced operating.
In March, the Minister of Public Enterprises told a parliamentary briefing that as the second-oldest commercial carrier in the world, SAA was ‘a national asset that had to be preserved’. In light of the substantial losses SAA should surely be referred to as a liability rather than as an asset.
In July last year Transnet declared that SAA was not part of its core business, cut its losses and sold the airline to the Department of Public Enterprises for R2bn, in the process writing off an R8,4bn loan. The SAA Bill to be passed some time this year will formally sever the airline’s links to Transnet. A major concern about the transfer is that the Department of Public Enterprises will not produce future financial statements and thus there will be no public accounting for future losses.
There is a growing consensus that SAA should be privatised to save taxpayers billions of rand. The CEO of SAA is on record as saying that he would like to see it privatised. However, the Minister of Public Enterprises has said that the airline should remain state-controlled. He says that selling shares on the stock exchange is an attractive idea but the timing is not right as the company is financially weak and will take a few years to turn around. His priority is to stabilise the company’s finances and recapitilise it. The Minister has also written to SAA chairman Jakes Gerwel stating that SAA “cannot and will not be supported at all costs”.
South Africans will benefit substantially if this “national asset” is privatised because taxpayers will no longer have to subsidise the airline. It is estimated that SAA’s losses have exceeded R20bn. These losses, paid for by the SA taxpayer, are made up of an accumulated loss of R11,2bn and an outstanding loan to Transnet of R8,4bn. The loan arose from a R6bn recapitalisation in 2004 and a further net R2.4bn added to equity in 2006.
SAA’s balance sheet is still weak and it remains dependent on taxpayer funding. That the company is again facing a serious financial crisis was revealed last year when the CEO announced that it needed another R4bn ‘recapitalisation package’ as a turnaround strategy – a proposal that apparently has the support of the Minister. Such support is surprising given that external auditors, Deloitte & Touche, reported that SAA spent R283 million ‘without proper controls’ in 2004/5. According to the company’s chairman, Jakes Gerwel, he has “never, or seldom, entered an organisation where systems were so lacking”.
Air travellers are among the wealthier members of society. In SA, we have the strange anomaly of these passengers on loss-making SAA being subsidised by poor taxpayers who never travel by air. While this may not be government’s intention, it is the consequence of current policy. Does it really make any sense for government to continue struggling to run an airline serving predominantly rich people at massive losses when private operators, if permitted, can and do provide all the economy’s air travel needs efficiently and profitably? The answer must be a resounding ”NO”.
Privatising the airline will save taxpayers from the cost of subsidising its perpetual losses. And the fiscus will be able to reduce taxes as a result of the combination of increased tax revenue from a profitable privatised SAA plus the losses they will no longer have to pay.
* Terry Markman is a consultant.
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My point exactly
I did not want to say it, but jetnut did,
Surely pensioning them off is cheaper all round than paying these huge amounts of overtime, and their salaries to boot!
Could probably employ three P3's for the same money. ( And before anybody tries the experience card, A p3 is there to build experience, not provide it)
Surely pensioning them off is cheaper all round than paying these huge amounts of overtime, and their salaries to boot!
Could probably employ three P3's for the same money. ( And before anybody tries the experience card, A p3 is there to build experience, not provide it)
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I am by no means advocating getting rid of the old-timers, I'll probably be one someday (they do however, deserve what they earn, simply based on their unfaultering and blinding faith in the company...since 1968). All I'm saying is that management (especially at SAA) must factor these costs into their income/loss strategic planning, and stop being babies about "how much pilots salaries cost", as being an airline pilot is a lifelong career for 90% joining a national carrier, and its not changing any time soon, unless the geniuses doing the (mis)management want to fly these aeroplanes.
Airlines throughout the world operating 744's, A340's, etc. have no problem compensating their pilots appropriately.
if a pilot was to make fundamentally flawed decisions in the execution of his job....everyone knows what will happen. Yet, when top management screw-up big time...they restructure! Go figure.
Airlines throughout the world operating 744's, A340's, etc. have no problem compensating their pilots appropriately.
if a pilot was to make fundamentally flawed decisions in the execution of his job....everyone knows what will happen. Yet, when top management screw-up big time...they restructure! Go figure.
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Interesting article in Finweek, with some very 
figures -
figures -
What's eating SAA?
If you were asked to list five things that are wrong with loss-making national carrier South African Airways, you'd probably come up with a fair few more than that - and many of them would be accurate. While rising fuel costs and competition from low-cost airlines go some way to explain the R883m loss by SAA last year, new research by Synovate, the market research arm of London-based Aegis plc, suggests the core of the issue is that the airline has too many inadequately qualified staff for the number of routes it operates. It compared SAA with its partners in the global Star Alliance grouping. Of the Star Alliance airlines with fewer than 60 aircraft in their fleets, SAA has the fewest number of destinations - just 34. The researchers point to SA's geography and the fact that many of the airline's most costly flights are long haul, which affects its ability to up frequencies with the fleet it has.
Compared with SAA, Poland's national carrier LOT, which also has fewer than 60 aircraft, serves 58 destinations. However, LOT does have the advantage of being closer to its key destinations. SAA operates 1,7 aircraft/destination - a ratio similar to that of the considerably larger US Airways and SAS Scandinavian Airlines, whereas LOT, TAP Portugal and Austrian Airlines have less than one aircraft/destination. The big difference comes in the ratio of staff/aircraft used by the respective groups. SAA has 11 000 staff for 58 planes to 34 destinations. LOT has 3 500 employees for 51 aircraft and 58 destinations. SAA has the third highest number of staff/aircraft in its fleet, behind Thai Airways and Lufthansa. With 190 employees/aircraft, SAA is considerably less efficient than SAS Scandinavian, which employs 42/aircraft and Spainair, with 51/aircraft. While air industry insiders point to the fact that SAA's pilots and technical staff are among the world's best, the report says global airlines employ more skilled staff than SAA does. Some airlines require on board service staff to have university degrees. The implication is that more productive airlines employ fewer, but better qualified staff. Says the report: "South Africa appears to be slow to catch up to global standards of technology. Does SAA use sufficient technology? Perhaps SAA needs to hire staff, whereas administrative jobs globally are conducted by means of technology?"
If you were asked to list five things that are wrong with loss-making national carrier South African Airways, you'd probably come up with a fair few more than that - and many of them would be accurate. While rising fuel costs and competition from low-cost airlines go some way to explain the R883m loss by SAA last year, new research by Synovate, the market research arm of London-based Aegis plc, suggests the core of the issue is that the airline has too many inadequately qualified staff for the number of routes it operates. It compared SAA with its partners in the global Star Alliance grouping. Of the Star Alliance airlines with fewer than 60 aircraft in their fleets, SAA has the fewest number of destinations - just 34. The researchers point to SA's geography and the fact that many of the airline's most costly flights are long haul, which affects its ability to up frequencies with the fleet it has.
Compared with SAA, Poland's national carrier LOT, which also has fewer than 60 aircraft, serves 58 destinations. However, LOT does have the advantage of being closer to its key destinations. SAA operates 1,7 aircraft/destination - a ratio similar to that of the considerably larger US Airways and SAS Scandinavian Airlines, whereas LOT, TAP Portugal and Austrian Airlines have less than one aircraft/destination. The big difference comes in the ratio of staff/aircraft used by the respective groups. SAA has 11 000 staff for 58 planes to 34 destinations. LOT has 3 500 employees for 51 aircraft and 58 destinations. SAA has the third highest number of staff/aircraft in its fleet, behind Thai Airways and Lufthansa. With 190 employees/aircraft, SAA is considerably less efficient than SAS Scandinavian, which employs 42/aircraft and Spainair, with 51/aircraft. While air industry insiders point to the fact that SAA's pilots and technical staff are among the world's best, the report says global airlines employ more skilled staff than SAA does. Some airlines require on board service staff to have university degrees. The implication is that more productive airlines employ fewer, but better qualified staff. Says the report: "South Africa appears to be slow to catch up to global standards of technology. Does SAA use sufficient technology? Perhaps SAA needs to hire staff, whereas administrative jobs globally are conducted by means of technology?"
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when will the public get it !!
Ladies and gentlemen...breaking news:
SAA is a section 21 company that pays taxes.
I like the part about "...best trained pilots in the world..." ,they're right.
SAA is a section 21 company that pays taxes.
I like the part about "...best trained pilots in the world..." ,they're right.
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4HP, I agree with the sentiment that is the staff numbers/ qualifications, which is a legacy of past and present powers. I do, however, feel the clever boys from FW missed a point or two.
The 3600 SAA technical employees(largest employment group), in addition to maintaining the SAA fleet, Look after Comair/ Kulula (soon entirely). They also do labour intensive D checks for Corsair, AF, LH, and a couple more. They have also started doing B737 freighter conversions, the first client being TNT. Are these staff/ aircraft numbers factored in? Doubt it.
I bet the FW boys don't have clue that Comair, for one, hardly have a technical section. Or flight performance for that matter. Or that SAA dispatch serve Emirates, Air Mauritius, to name a few.
DJ, could you give an indication what the crew demands are on long range vs domestic esp taking crew slipping into account(dkr-jfk)?
Study the effect of the US Airways hub system (La Guardia/
Charlotte/ Orlando) on routes/ airplane. FW Use destinations/ airplane. Similarly SAA LHR, FRA and DUR are three destinations from JNB. They are also served from CPT, so 6 routes, 3 destinations. Polish rfly from a single hub. Therefore, EVERY destination is ONE route. For US Airways, this is vastly different. ie Chicago served directly fro La Guardia, Charlotte and Orlando. FW still think destinations is the best way to go?
The 3600 SAA technical employees(largest employment group), in addition to maintaining the SAA fleet, Look after Comair/ Kulula (soon entirely). They also do labour intensive D checks for Corsair, AF, LH, and a couple more. They have also started doing B737 freighter conversions, the first client being TNT. Are these staff/ aircraft numbers factored in? Doubt it.
I bet the FW boys don't have clue that Comair, for one, hardly have a technical section. Or flight performance for that matter. Or that SAA dispatch serve Emirates, Air Mauritius, to name a few.
DJ, could you give an indication what the crew demands are on long range vs domestic esp taking crew slipping into account(dkr-jfk)?
Study the effect of the US Airways hub system (La Guardia/
Charlotte/ Orlando) on routes/ airplane. FW Use destinations/ airplane. Similarly SAA LHR, FRA and DUR are three destinations from JNB. They are also served from CPT, so 6 routes, 3 destinations. Polish rfly from a single hub. Therefore, EVERY destination is ONE route. For US Airways, this is vastly different. ie Chicago served directly fro La Guardia, Charlotte and Orlando. FW still think destinations is the best way to go?
Last edited by fly nice; 14th Aug 2007 at 11:33.
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You all seem to have lost the plot. We know clearly where the problems lie in SAA - Its pay back time.
1. Your freely elected goverment placed the managers in SAA if they want to appoint such monkeys to run the company then they must pay the bill.
2. To say SAA pilots earn to much is a loss to the whole of aviation in Southern Africa, there salaries are based on international norms. The problem is that the other airlines salaries are bad and the pilots with the Comairs, 1Time have not bothered to fight for there rights.
1. Your freely elected goverment placed the managers in SAA if they want to appoint such monkeys to run the company then they must pay the bill.
2. To say SAA pilots earn to much is a loss to the whole of aviation in Southern Africa, there salaries are based on international norms. The problem is that the other airlines salaries are bad and the pilots with the Comairs, 1Time have not bothered to fight for there rights.
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....there salaries are based on international norms.
The regulations that govern SAA pilot salaries are based on over 20 years of hard negotiations, blood, sweat and tears. That is a fact that must be taken into account when uninformed, "take the moral high-ground", cry-baby, whingers go on an SAA pilot bashing spree.
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This is not about bashing SAA pilots, its the WHOLE industry that gets to suffer. If SAA was making a profit, a real profit, they can pay what they like.That would be market driven. And please, this is NOT about pilots salaries at SAA, This is about the WHOLE company, top to bottom.
Here's the deal, cut the apron strings from the governemnt coffers, then lets see who does there whinging then?
Please refer to the following and tell me where the international norms are
http://www.willflyforfood.cc/airline..._Pilot_Pay.php
Remember the reason the other airlines cant pay like SAA cause the have to compete with a subsidised SAA.
Let the market forces play out. The WHOLE industry will be better off in the long run. Protectionism has never been the answer.
The regulations that govern SAA pilot salaries are based on over 20 years of hard negotiations, blood, sweat and tears. That is a fact that must be taken into account when uninformed, "take the moral high-ground", cry-baby, whingers go on an SAA pilot bashing spree.
2. To say SAA pilots earn to much is a loss to the whole of aviation in Southern Africa, there salaries are based on international norms. The problem is that the other airlines salaries are bad and the pilots with the Comairs, 1Time have not bothered to fight for there rights.
http://www.willflyforfood.cc/airline..._Pilot_Pay.php
Remember the reason the other airlines cant pay like SAA cause the have to compete with a subsidised SAA.
Let the market forces play out. The WHOLE industry will be better off in the long run. Protectionism has never been the answer.
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My take on this.
Management. That's all.
SAA is managed like a long drop in the veld.
Will it change? NO
SAA is a mass equity employer and will continue to be so, at management level - even more so.
So effective downsizing will not happen and the rot will continue.
(Grounding 747's off routes that BA, Air France, KLM, Lufthansa etc. are using the same a/c on is simple mismanagement of the a/c AND the route.)
What's the end of it all?
Like all the rest of the infrastructure in SA that's falling apart - SAA will go the same way.
It's a VERY sick horse! The cure is some painfull medicine that's not going to be given. Shooting the horse will also not happen. So just let it slowly grow old and lame until it falls over. Then flog it while its down untill it dies. Then hang the skin over a wooden horse and call that your national flag carier aka Namibia, Zimbabwe, etc.
On salaries. SAA is the reason that other pilots in SA earn more than school teachers (which is nothing), imagine if all SA pilots were paid according to Comair's pay! - That will be a sad day!
If I was 62 and someone was willing to give me a bag of $$$ every month I'll take it!!
Management. That's all.
SAA is managed like a long drop in the veld.
Will it change? NO
SAA is a mass equity employer and will continue to be so, at management level - even more so.
So effective downsizing will not happen and the rot will continue.
(Grounding 747's off routes that BA, Air France, KLM, Lufthansa etc. are using the same a/c on is simple mismanagement of the a/c AND the route.)
What's the end of it all?
Like all the rest of the infrastructure in SA that's falling apart - SAA will go the same way.
It's a VERY sick horse! The cure is some painfull medicine that's not going to be given. Shooting the horse will also not happen. So just let it slowly grow old and lame until it falls over. Then flog it while its down untill it dies. Then hang the skin over a wooden horse and call that your national flag carier aka Namibia, Zimbabwe, etc.
On salaries. SAA is the reason that other pilots in SA earn more than school teachers (which is nothing), imagine if all SA pilots were paid according to Comair's pay! - That will be a sad day!
If I was 62 and someone was willing to give me a bag of $$$ every month I'll take it!!
