SAA asks for a R6-billion handout

[Shrike200]

Originally Posted by jbayfan

Haven't gone quiet....just busy with my bidsheet trying to decide whether to go ....snip bla bla crowing at the lesser mortals... take my BMW 1200 down to the airport, hop in my RV7 and head down to my holiday home at the coast.

Well, at least you've now openly embraced the moral low ground.

[Beechdrivr]

Hate getting involved in these mud slinging matches but having read jbayfans last post, all i can say to you is you re a childish tw*t. That's just a plain stupid post and just adds fuel to the fire.

I'll leave you all to carry on.

Safe flying

[jbayfan]

Truth is I don't have all those toys.....just tired of this constant SAA bashing.....you guys lit the fire (again) and I'm just fueling it out of pure irritation at your "bash SAA at all costs" attitude.

After the taxman has taken his bite out of my salary and I have paid for all those things that my taxes should have provided, there's actually not that much left over for anything else. Private schools for the kids (nothing fancy, just the same that thousands of other Gautengers send their kids to), medical insurance, a bond of just over R1 million, exorbitant rates, taxes, electricity and water bills, insurances and security services, vehicle payments (over-inflated initial vehicle acquisition cost with Netstar, insurance etc), there's little left over for anything else. Certainly not for a BMW motorcycle, private aircraft or holiday spot.

Took me 13 years from the day I started flying to get into SAA.....worked my ass off in many of the ass end of the world places you guys flew, possibly with you, and made it into SAA......no apologies from me for that. We don't look down on you as lesser mortals as so many of you have intimated. We understand that your airlines don't get government bailouts, but you also don't have government interference and politically motivated appointees or commercial obligations. We know your salaries are lower than ours for similiar work.......but 27 years after I first climbed into an aircraft and 15 years after being hired by SAA I am still an FO and still have to make bunks and fold rags and bags when rostered as a P3 while most of you obtained your command after as little as 2 or 3 years with your airline. If you see us on a nightstop in SA, pop over for a chat and a drink.........you'll find that we are friendly and humble and not a bunch of elitists.

Hope to see you out there sometime so that we can change your mindset over a friendly brew.

[Beechdrivr]

Jbayfan

Fair enough mate, just got a bit irritated with that post. Most of us have paid our dues. I've been there done that too, took me 10 years to get to the top. Just your good fortune that you happen to fly for Spoories. I can promise you that if i ever got a gap to go, i wouldn't hesitate as i'm sure most of the other posters here would too.

I suppose that's just the nature of the beast you guys are saddled with most of the time. Not that i condone what SAA wanna do, i think they should go it on their own like the rest of the airlines have to. Only fair i think. You guys work there, it's not your fault you have it so good. Anyways good luck.

Safe flying

[Shrike200]

jbay, we've all got bills to pay, and we didn't light this fire again actually - SAA did when they asked for (another) R6000000000 (that is a f**kton of money, seriously. Wow...just...wow. Not that they'll get it all. Be prepared for epic ignition if they do ) I'm not having a go at you, but what riles us is that you get more money to do it with (so it's not like that means you've got any more reason than us to moan about that stuff), taken from that massive chunk of our salaries that goes to tax....well, we don't like seeing it wasted. Nor do you. Not just on a company like SAA - on anything the government sees fit to piss our money away on. You know the feeling, as you've said.

SAA is just one, avoidable (IMHO) item in that long list. Not only do we also see ourselves also having to pay for everything that our taxes should get, to add insult to injury we have to sponsor you guys. Your next paycheck - just think, a tiny little fraction was paid by me personally, and a noticeable fraction by the company I work for. You must understand how that can be irritating surely? And you (again, IMHO) are trying to defend the indefensible. Loyalty to ones company is an admirable trait, within reason however. I (and, it seems, many others) think SAA has stepped beyond the bounds of reason in this regard. Surely you can appreciate this view as more than just 'bashing SAA'? Don't you think there is some merit to the argument against state sponsorship of a company that should be able to survive unaided?

My beef isn't with you personally of course - although I do believe that if you (any SAA pilot) wants to feel genuine pride in your airline again, YOU need to be agitating from within for change - YOU need to be advocating that your company stands on your own two feet - many of you may well do that, I don't know.

So.....that brewsky you offered.....the bottom line is, you're buying

P.S. I don't want to work for SAA - seriously, no CV in there. Happy where I am, thanks. Anyone know what the breakdown of domestic airline traffic in SA is? Pax numbers, aircraft movements etc?

[Avi8tor]

As a regular on this topic over the last 10 yrs or so, my comments remain the same. Sell it off! If it's such a great business, it will be listed and we can all make a fortune on the shares.

I read somewhere that SAA has had R16 billion over the last 10yrs. That sounds like properly capitalized to me.

[Deskjocky]

SAA is a ticking time bomb financially. One just has to look at the many government hand outs its needed and will continue to need to stay afloat.

Why is this? the major problem is SAA is battling to remain relevant in the wider global aviation market. In my view this is due to a few reasons:

-South Africa's geographic position forces SAA to focus on O&D traffic. This is why the route network has and will continue to shrink in real terms.
-Massive competition from not only legacy carriers but also the ones from the Middle East. SAA's product (holistically- FFP, route network, etc) is lagging behind. In add ton to this african carriers like Ethiopian and Kenya Airways are establishing their own networks that are diverting traffic away from SAA's Africa network.
-Domestic competition continues to grow. Comair's acquisition of new 800's is a watershed. Mango also seems destined to be rolled back into SAA at some point, which will have a negative effect on its cost base and by implication its fares.
-Political interference continues to hinder the company. Its an instrument of state.

SAA's future is secure as long as the government is happy to chip in cash when needed. How long will this last? Probably for a long time- right up until corruption has taken so much cash out the system that there is nothing left for SAA.

[dash431]

Its quite simple actually. SAA wont survive privatisation, as they dont make money. End of story. and thats what all the employees are scared of... as I would be if I worked there.

[Jetjock330]

Fine for SAA

I guess that bail out will cover this SAA fine too!

SAA was fined 18.8 million rands ($2.5 million, 1.9 million euros) and Singapore Airlines 25.1 million rands, the Competition Commission said in a statement.

The settlement will also resolve a separate case against SAA, which was accused of collusion over domestic fares and international cargo charges during the 2010 football World Cup, it said.

"SAA has offered its full cooperation to the commission in its ongoing investigations and prosecution of both the matters," the statement said.

"Similarly, Singapore Airlines undertook to do the same with regards to the Far East matter."

The decision made no separate finding against South African Airways in the World Cup case but the fine will settle the matter, it added.


Just amazing what the tax payer is in for!!!

[DRPAM007]

I can understand the frustration of those who think that SAA is being unduly favoured by the government. The truth is that the aviation industry is witnessing another downturn everywhere except China and the middle east, and even these two regions are not completely immune from the wider effects of the global slowdown. The industry is not usually profitable business in a developing economy, not with the social imbalance that still exist in SA and the current unemployment rate of nearly 25%. However, it is too strategic to be allowed to driven by pure market economics. Those of us that are non- South African Africans are proud of the efforts SA has done to keep SAA in the top 80 airlines world-wide. There is need for a more sustainable strategy than just throwing money into the airline considering other pressing issues in the polity. It is quite possible to run profitably but much easier to make losses. The traffic growth forecast for Africa has exposed African carriers to increased competition and usually those with deep pockets win since it becomes a battle of attrition. Hence without increased funding SAA will not stand much of a chance. 5 years ago American Airlines was the biggest and most profitable airline in the world and it is fighting for it's survival. Though the USA denies it, chapter 11 "protection" is actually a "protectionist feature".

However, a winning strategy will be to have cross-border mergers among the airlines in the SADC region. But as we all know SAA is 98% government owned and the balancing of public service obligation and economic objective will make this strategy nearly impossible to pursue.

A country like Nigeria (with the second highest rpk in Africa) must force it's privatized local aviation industry to quickly consolidate through mergers and strong long term commercial agreements or face extinction in the next five years because the foreign competition is going to heat up.
Any takers on the alternative to government funding in this competing environment?

[suitcaseman]

Chapter 11

Is chapter 11 protection not available to all airlines in the US and not just state owned ones?

[Trossie]

Are there any 'state owned' airlines in the US, or the UK, or any other such countries? Why should the state own an airline in the modern world?

[NextLegUndefined]

A few thoughts:

The modern world doesn't apply to Africa.

Who will pay for Air France's massive loss this year?

Who will pay for KLM's massive loss this year?

Who will pay for Luftansa's massive loss this year?

The closure of SpanAir? Malev Airlines? Who do you think will pay for that?

Kingfisher and American Airlines going the same way? Maybe Quantas one day not too far away...?

SAA's income stream from operating in Africa is in relatively very weak currencies, yet bills are in strong currencies. SAA's chief international competitors are economically massive in comparison and can afford brutal price wars on routes and ambitious fleet replacements with new 787s, A380s, etc...

SAA is up against these and many other factors, including some despicable political interference by our own government, an unpresidented attempt at complete African airline industry domination by (government backed) Emirates, rising fuel prices on massive fuel quantities (relative to all other RSA airlines), increasing airport and industry taxes (EG carbon taxes in the EU, Heathrow charging 5 times normal taxes), escalating catering costs (a much smaller problem for low cost carriers), over-capacity on some routes and inefficient (old) aircraft as well as the restrictive access to highly-regulated markets outside of Africa.

It is not as well managed as a privately run business could be but it is of strategic importance to the country to have it, when it comes to growing tourism, new routes (and markets), diplomatic ties, trade agreements, etc...

How many South African aviation companies are operating a fleet of twenty or so wide body airliners up against these conditions?

What would happen to the pilot industry in RSA if SAA folded and 800 pilots (95% holding between 4000 to 25 000 hrs experience each) was to flood the market? And long term, what would be the effect of such a shrinkage in our aviation industry on flight schools, engineers, cabin crew training, and aviation management personnel development? It would all but kill it as the likes of Emirates and other big carriers would eventually dominate even the domestic market.

It burns tax payers no end to have to fund a business that should theoretically run on its own, no-matter what uniform that pilot/tax payer happens to be wearing. But over simplifying the problem into things like bad management, politicians and high pilot salaries is not hitting the nail on the head, in fact it just shows a lack of willingness to try and understand the complex answer.

I am willing to admit that the complex answer is beyond my scope of study and expertise as a pilot. But by writing, in this forum, generalised negative character traits in SAA pilots, the supposed 'rediculous pilot salaries' that are causing the airline to run at a loss, and coming up with other simplistic answers as to the cause of government funding of SAA is utterly useless. It does not generate understanding, stimulate debate or build knowledge. It is unintelligent and insultary.

I don't become a Marxist loving, corrupt politician when I put on my SAA uniform. I am not overpaid, my family live a modest lifestyle and I have very little money left at the end of the month because I believe in spending only what money I have. I also don't find myself sitting on holiday, I earn my monthly salary.

I would love to see SAA privatised, in an ideal world. But every day I am reminded that I chose to live in a beautiful but not-so-ideal world, called Africa.

[jbayfan]

Excellent post, NLU

[JCO7]

A lot of great points NLU.

I agree that there is some strategic importance to having a national carrier for the reasons you mentioned. But at what cost to a) the taxpayer, b) private airlines who compete against SAA in the local and regional market and do not have access to bail out funds and c) the free market system in general which in theory should allow efficient allocation of scarce resources?

When an uncompetitive state player is kept on artificial financial life support it skews the entire industry and everyone (except those benefiting directly from SAA) is worse off.

If SA's aviation industry does need to shrink, then so be it. However, I believe that our industry is actually being artificially limited by a state entity's over powering role in it.

A competitive and efficient SAA would take market share from other international operators like Emirates etc. and there is then no reason why SAA has to remain a small competitor against the larger airlines, rather than be a force to be reckoned with. However, to achieve this SAA would probably have to be privatised or allowed to fail in order for another airline to fill this role.

Yes should SAA fail there would be a flood of experienced pilots on the market, which would have very negative short-term consequences for the supply and demand dynamics, but these pilots would be absorbed into other airlines where they will likely be used more efficiently, including the private airlines which would be allowed to grow and flourish in the absence of SAA.

I believe the "complex answer" to growth and prosperity in the aviation industry in the face of the adverse factors that NLU mentions will be found by an innovative private sector when allowed to do so. SAA's and the governments' answer to the challenging business environment is merely the injection of more and more money, good money chasing bad.

The excuse that this is Africa and things don't work here like they should hold less water in SA than in the rest of Africa. We have strong, profitable, world-class private companies in other industries in this country, who compete on a square footing with international competitors. Why not in the aviation industry?

[NextLegUndefined]

Hi JC07, I agree with you (without correction) on every point of your post and I aspire to exactly the same thing. My answer to your questions: Because of politicians.

[Solid Rust Twotter]

Any state which has a permanent staff of officials, they begin as our servants and end up imagining themselves our masters.

Cicero

[Shrike200]

NLU you make a well reasoned post, though I remain totally unconvinced, I'd go with JCO7 on this one. And of course my opinion is incredibly valuable in the aviation industry. /sarcasm

Originally Posted by NextLegUndefined

inefficient (old) aircraft

I'm going to genuinely go WTF and ask for some education as to which aircraft SAA has which are old and inefficient. Seriously? (I have my serious question face on now) Maybe you meant to say 'not brand new'. The A342's were a bit sucky, sure, but aren't they going/gone? Otherwise you've got reasonably decent aircraft all round surely, decent enough to work with at least?

insultary

I entered that into my electronic dictionary and it made a smiley face

Also, the whole idea of 'strategic importance'. It's a bit of a nebulous concept really. Do you mean to say that tourists somehow wouldn't be able to fly here if SAA were to vanish? Or that business/diplomatic ties would somehow become untenable without SAA? If there's money to be made on the route, somebody will fly it. It doesn't have to be SAA, or even an SA company really, much though we might like it to be. We'll just have to face the fact that the SA government has removed SA's ability to compete with the big boys, by virtue of being incredibly dumb and short-sighted maybe?

The cost factors (Heathrow, fuel etc) you mention apply to ALL long haul operators - they need to make a plan, so does SAA. Preferably without involving yet another bailout. Emirates has massive backing, sure - are you saying that it's basically a question of 'do we go head to head with Emirates'? (Because it seems like SAA might lose that one, so let's not reinforce failure IMHO)

SA law prevents foreign carriers from operating domestically, so at least we'll have that. Yet SAA stifles competitive, sustainable growth there too. By the time we've all finished fighting over the scraps, we'll be weaker than ever.

Anyway. I think the horse might be dead now. Also, I get the distinct impression that our opinions on the matter are irrelevant. Nice quote SRT. The more things change....

[millertime]

Strategic Importance

I generally don't get involved in these threads as they are often emotional and childish (from both sides). The last few comments though, both for and against, have been interesting reading. The fact that SAA fly to the Americas, Europe, the East, Australia and Africa means that there is unfragmented unified competition on the routes and that the passenger benefits from the low prices that result. Emirates which is entirely government backed (and any other Airline) are not here because they like South Africa, they want to make money. In the absence of competition, prices would skyrocket and we would become another African country paying a fortune to get to the outside world. The only reason that passengers in SA can continue to pay the ridiculously low prices for long haul tickets ( in the face of $125 a barrel, EU emission charges and rising user costs) is by offering the passenger another unified option. The taxpayer does benefit and therein lies the strategic importance of SAA.

[Tableview]

Interesting views on here. I'm going to throw in another idea.

SAA is kept alive by government subsidies because it has not really moved on from the old 'Spoorweg' days when it was part of SAR & H, that nepotistic organisation which provided jobs for the boys, who in those days were the Van der Merwes, who were unemployable in the private sector. The lowest grade were paper-shufflers and form-stampers in those Limpopo-grey glossy painted offices, the ones who had the right assets were trolley dollies and check in clerks, and those with connections (Broederbond) were senior management.

Time rolls on and now SAA is a nepotistic organisation which provides jobs for the boys, who now are the Siphos, who are unemployable in the private sector. The lowest grade are paper-shufflers and form-stampers in those Limpopo-grey glossy painted offices, the ones with the right assets (skin colour) are trolley dollies and check in clerks, and those with connections (ANC) are senior management.

It's a good airline, although inconsistent in service delivery, I've just had two long haul flights on the same route, the second as outstandingly bad as the first was good. But it's an airline that really shouldn't be there in its present form.