Unfunded SAA to pay 50% of salaries

Unfunded SAA to pay 50% of salaries
Source: Businesslive.co.za
Date: 27-11-2019 Time: 03:11:42:pm

Employees at troubled state airline SAA will be paid 50% of their November salary and 13th cheque on Wednesday, the company said in a notice.

The company intends to pay the balance of the salaries on Monday.

“As at the issuing of this communication, the necessary funding to enable SAA to pay salaries has not been finalised. However, SAA understands that employees have to fulfil their financial commitments. In the interim, our cash position has improved so we can pay the salaries as indicated,” said the notice.

SAA, which last week suffered the effect of a strike that grounded operations and reduced revenue, has also been unable to raise working capital to fund operations. While the Treasury has provided a R5.5bn bailout, that is strictly tied to the repayment of short-term debt. The Treasury also agreed to repay R9.2bn of historic debt over the next three years.

But to continue operations, the airline needs to raise at least R2bn from commercial banks for which it requires a full loan guarantee from the government. This has not been forthcoming.

In a bid to bolster SAA’s management capacity, public enterprises minister Pravin Gordhan last week appointed the acting chair of the board, Thandeka Mgoduso, as the executive chair for two months.

SAA has not had a permanent CEO since June when Vuyani Jarana resigned or a permanent board chair since July. Zuks Ramasia has been acting CEO since Jarana’s departure.

In a letter to Mgoduso, Gordhan said that he acknowledged the executive team “is doing their best in dealing with the myriad of challenges the company [is facing] and that the appointment of a permanent CEO has not been finalised”, adding that he is “of the view it is in the best interests of SAA that you assume the role of interim executive chair”.  

Mgoduso is one of the longer serving members of the SAA board and was first appointed in 2016. She has a background in freight logistics and has served as a director on several large companies.