South African Airways Leadership Compact, A Ground Breaking Initiative

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Unions and the Department are working together on a business model that deals with what a new national carrier of the future will be
By :
AT Reporter

South African Airways-SAA is set to be restructured into a new airline, according to the Department of Public Enterprises-DPE.

In a statement dated May 1, 2020, the DPE said a leadership compact had been signed by “all parties” committing to a new approach at SAA that includes a “performance-based culture change for all leadership, management and employees as the transition to a new airline takes place.”

In the Past, the airline industry has been able to navigate its way through many difficult periods based on the known facts relating to the market, socio-economic, financial, skills and related issues.

However, within months the ministry says they have seen a virtual global collapse of the airline industry. Just like any one else, they are asking who would have foreseen that giants of the industry such as Boeing, British Airways and Virgin would be struggling to survive and retrenching thousands of employees?

“We are now faced with the unknown post COVID-19 pandemic and there is no precedent or certainty which can be followed in developing a new strategy,” said Public Enterprises minister Pravin Gordhan, adding that, “The parties will be pioneers in writing a new book”.

With the Covid-19 storm surging around the world and the fog of economic uncertainty descending, a new and bold approach is required if there is to be any chance that South Africa can retain vital airlift capacity and trade connections, through a strategic national asset, with both public and private sector participation, which is internationally competitive, viable, sustainable and profitable.

Moving forward, and looking to the future, minister Pravin Gordhan has established very demanding timelines for the development of the Business Rescue Plan and parameters in order to determine what path the old SAA could follow.

“The transition to the new airline may require sacrifices, pain and hardships for all concerned, particularly for those employees who may be displaced,” Gordhan said.

“The leadership Forum recognises that they have a responsibility to mitigate these challenges through a range of measures including but not limited to, preferential reemployment, reskilling and enterprise development opportunities,” he added.

He also revealed that the Unions and the Department are working together on a business model that deals with what a new national carrier of the future will be but also crucially how this can be achieved to ensure a competitive edge in safety, quality and costs in the sectors which SAA competes.

“The agreed intention is to produce an airline which is a catalyst for investment, job creation in key sectors, economic growth throughout all regions of the country and is a mirror to the world reflecting the splendour and beauty of South Africa,” he said.

And to do so, Africa Tembelea understands that there is need to design an airline that will be funded through a variety of options such as strategic equity partners, funders and the sale of non-core assets. The parties however also agree that the state must continue to play a role.

“The creation of a new, dynamic airline, with the correct corporate structure, led by skilled, competent and experienced management and staffed at competitive and benchmarked rates will allow for the new SAA to compete in the post Covid-19 world,” the minister stressed.

He also said that airlines around the world are failing, but with the correct vision, leadership, business and operating model, funding and implementation the new national carrier will be well positioned to take to the skies again and contribute to the South African and African economy.

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