South African Airways (SAA) has started a restructuring process that could see the cash-strapped state-owned carrier cut its workforce by almost a fifth.
As required by South African law, the airline has started talks with labour unions about its plans, which could affect 944 of its 5,149 employees, SAA said in an emailed statement. The proposed reorganisation includes all SAA divisions and departments, excluding low-cost arm Mango, Air Chefs and the SAA Technical unit, it said.
SAA is one of several state-owned companies, including power utility Eskom Holdings SOC Ltd, the South African Broadcasting Corp and state arms manufacturer Denel SOC Ltd that are fighting poor finances after years of mismanagement and alleged corruption. Finance Minister Tito Mboweni said last month the government is talking with potential investors in the airline to ease the burden on the national budget.
Identifying an equity partner has been proposed in the past, though no buyer has officially come forward.
Ethiopian Airlines Group Chief Executive Officer Tewolde Gebre Mariam last month said his airline would consider taking a stake if a request was made. Richard Branson, the founder of Virgin Atlantic Airways Ltd, has said his company would also consider taking a stake.
SAA has incurred more than 28 billion rand ($1.9 billion) in cumulative losses over the last 13 years and missed the deadline to submit its earnings for the financial year ending March. While it recently received a 5.5 billion-rand government lifeline to extend maturities on outstanding debt, it hasn’t been able to reach an affordable repayment plan with creditors.