SAA spends R100m on packages ..

[Gunship]

Damn .. they do not take sh:mad: ...
From : http://www.finance24.com/Finance/Companies/0,,1518-24_1671130,00.html

outh African Airways (SAA) has set aside over R100m for voluntary severance packages for managers, SABC radio news reported on Thursday.

This was part of an attempt by the airline to save R1.5bn after posting a loss of almost R9bn in the last financial year.

The airline wanted to retrench a large proportion of its 602 managers, SABC reported.

Public Enterprises Minister Alec Erwin was quoted by the SABC as saying that the airline hoped its job cuts would return it to profitability.

[Gunship]

From News24

King-size headache for SAA


Johannesburg - About 100 senior managers at South African Airways (SAA) have applied for voluntary severance packages, but this has created a king-size headache for chief executive Khaya Ngqula who wanted at least 300 of the 600 top managers to quit by the end of this month.

Ngqula had planned to introduce a new management structure by the beginning of next month as he tries to return the airline to profitability.

Insiders said the woes of the national airline were far from over.

SAA needs to retrench about 5 000 employees to meet the internationally-accepted norm of one manager for seven workers. According to the current figures, four workers report to one manager.

Most airlines around the world have cut jobs as they try to reduce costs and return to profitability.

Onkgopotse Tabane, SAA spokesperson, said the airline had not considered general staff retrenchments because it believed it could achieve significant savings by trimming the management team.

"Although about 100 managers have applied for packages, this does not begin to resolve the problem faced by Ngqula because the majority of those who have applied are not the people that SAA wants to get rid of.

"It is common knowledge that in many instances, the highly talented managers who can secure jobs anywhere are the ones who offer to quit. Those who have nowhere else to go remain and, unfortunately, they are the ones whom the CEO is targeting for packages," said a senior manager.

Increased competition

Tabane said the airline would decide on its course of action after assessing the applications.

SAA had to extend the deadline by two weeks for people who wanted to accept the packages after a seemingly low uptake on the initial deadline of the middle of last month.

The public enterprise department announced this week that R100m has been set aside for packages at the SAA.

Ngqula has received board approval to cut costs by reducing managers by half. He asked all his managers to apply for the packages.

"Some of those who have applied for packages will not be granted because there is still a need for talent.

Perhaps the bigger question is what will the CEO do now that his plan to reduce the structure at the top seems to have proved ineffective. And again, what will he do about the problem of a bloated workforce?" asked another manager.

SAA is facing increased competition on its domestic market from low-cost carriers.

The hike in the oil price this week compounded the airline's problems because fuel is one of its main costs.

It also aims to win back more business travel clients on its international routes.

[B Sousa]

I guess one thing they have not learned from the U.S.

"Layoffs"

It certainly appears via the news in SA that the SA Taxpayer has way too much money. All I see is they keep paying, and paying....

[The Claw]

"SAA pleads poverty to avoid fine
March 7, 2005

By Ann Crotty

Johannesburg - SAA faced a real risk of insolvency, and many employees risked losing their jobs if the competition tribunal imposed a fine of R100 million on the airline as recommended by the competition commission, the airline's legal team said at the weekend.

On Saturday, the tribunal heard the closing arguments of a case that was initially brought by Nationwide Airlines in April 2000.

Nationwide alleged that SAA, the dominant player in the market, was offering incentives to travel agents and their consultants that were in contravention of the Competition Act. After investigating the allegation, the commission took Nationwide's case to the tribunal.

At Saturday's hearing, which was the close of an extremely protracted and highly controversial case, the tribunal was told that "having regard to all the circumstances referred to, the commission recommends an administrative penalty of R100 million to be imposed on SAA".

It also recommended that the tribunal prohibit the incentive schemes employed by SAA.

The amount of R100 million represents about 5 percent of the total revenue derived by SAA in the affected line of business during the period June 2000 to May 2001. In terms of the Competition Act, the tribunal can levy a penalty of up to 10 percent of the "affected revenue".

The circumstances referred to by commissioner Menzi Simelane included the anti-competitive behaviour by SAA as well as the way SAA conducted the case before the competition authorities.


The commission stated that harm had been done to consumers through higher prices and "consumers having to fly at less convenient times than if they had been offered an unbiased selection of ticket options".

It stated that SAA could not show that it offered better services than its competitors, Nationwide and Comair.

"The competitors of SAA suffered considerable losses in revenue notwithstanding that the evidence indicates that Nationwide and Comair were generally regarded as providing a better service to the travel agents and therefore ultimately the consumer."

The commissioner also noted: "SAA has throughout the process attempted to delay the conclusion of this matter." In addition, it stated that SAA had continued some anti-competitive practices even after the commission had pronounced against them.

In its closing arguments, SAA's legal team said that by March 2004 SAA was technically insolvent and the airline's cash on hand only covered its operational costs for 30-day periods.

"Clearly, any penalty and fine will have disastrous consequences on this cash flow." It suggested that if SAA was able remain in business after paying the fines it might have to increase its fares to cover the cost."




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[Jacobest]

Amazing how the amount set aside for the packages just happen to be the same amount for the fine. Maybe the managers should go away empty handed since they caused the company to peform so negatively.

As for the raising of the fares, maybe they should, then more people will start to fly with the competition. Otherwise, raise the fares and then government must just cut our tax.

But on a serious note. If SAA is wanting to play that game ( SAA was able remain in business after paying the fines it might have to increase its fares to cover the cost )then maybe their true colour is finally starting to shine through, and it just makes me wonder if airlines like Flitestar, Phoenix, Sun Air would still be here if SAA did not exist. Think of all the jobs lost with these airlines.

[Rhodie]

Bringing this back to 1st page due to new question just posted on "Rumours" thread...

Cheers

R