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S African govt rules out any further funding to resolve airline wage strike

"The pattern of bailouts has become a moral hazard," says Public Enterprises Minister Pravin Gordhan.

Cape Town

SOUTH Africa's government ruled out an intervention in the ongoing battle between the struggling state airline and unions leading a strike, with Public Enterprises Minister Pravin Gordhan refusing to step in to fund wage demands.

The state has already given South African Airways more than 20.5 billion rand (S$1.9 billion) over the past three years, Mr Gordhan said in an e-mailed statement on Tuesday. The country is facing severe fiscal constraints and no more aid can be made available, he said.

Two labour unions representing more than 3,000 staff at SAA walked out on Friday in protest at the airline's plan to cut jobs and refusal to meet demands for an 8 per cent wage increase. The carrier, which has offered a raise of 5.9 per cent, has halted a number of flights and warned that the viability of the entire business is being placed at risk.

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"The pattern of bailouts has become a moral hazard," said Mr Gordhan, who met with the unions in Pretoria. "A restructuring of SAA's business is required to return the airline to profitability. In addition to growing revenues, efficiencies must be improved and costs will need to be reduced across the board."

The minister ended a labour dispute at state power utility Eskom Holdings SOC Ltd in 2018 that interrupted the country's power supply. He indicated that he won't do the same to resolve the SAA impasse, saying negotiations are being handled by its management team.

Unions should work with SAA to find a speedy resolution to the labour action, which has grounded flights and is worsening the carrier's already precarious financial position, Mr Gordhan said.

Talks aimed at breaking the deadlock ended late on Tuesday night without a resolution being reached, according to the National Union of Metalworkers of South Africa.

According to the latest strike update from SAA, all international and some regional flights are back in operation, while domestic services are being provided by the SAA's low-cost unit Mango Airlines SOC Ltd and partner carriers Safair Operations (Pty) Ltd and SA Express.

All operations are compliant with safety standards. A growing number of employees don't support the strike and are returning to work. BLOOMBERG