Commodities

Unions up ante at South African Airways as finances approach crunch

Credit: REUTERS/SUMAYA HISHAM

Unions are escalating a crippling strike at South African Airways (SAA) after talks broke down, leaving the state-run carrier at risk of liquidation without a government guarantee to secure bank funding, a board member said.

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JOHANNESBURG, Nov 20 (Reuters) - Unions are escalating a crippling strike at South African Airways (SAA) after talks broke down, leaving the state-run carrier at risk of liquidation without a government guarantee to secure bank funding, a board member said.

The strike at the cash-strapped airline is entering its sixth day, compounding a dire financial situation. Initially the airline said the action cost 50 million rand ($3.4 million) a day, though that figure has come down as some cancelled flights resumed.

Striking unions and SAA held talks on Tuesday that continued well into the night, but ended without agreement and with the unions working to follow through on a threat to shut down South Africa's entire aviation sector via a secondary strike.

A spokeswoman for the National Union of Metalworkers South Africa, which called the strike over jobs and wages alongside the South African Cabin Crew Association, said there would be "no surrender".

Phakamile Hlubi-Majola said a secondary strike notice and strike certificate had been issued for aviation catering firm Air Chefs and airline Comair COMJ.J respectively. Unions have 48 hours to issue a strike notice following a certificate.

With no end in sight to the costly strike, SAA's future hangs in the balance. The government has said there is no more money in public coffers to save the airline yet again.

Board member Martin Kingston said on Wednesday the airline had no cash in the bank and the action was accelerating its demise.

"At the moment, Rome is burning. We don't have the time or the luxury to consider industrial action," Kingston said on news channel SABC.

"Unless we are able to secure guarantees from national treasury - and we're in discussions with them as you and I speak - then the board will have to recommend to government that actually it be placed in liquidation," he said.

"We need to be confident that we have the financial wherewithal to trade for the next 12 months on a solvent basis. That is not currently the case."

Kingston said it would become apparent in the next month whether SAA could trade its way out of the current situation.

(Reporting by Emma Rumney; Editing by Christopher Cushing and Dale Hudson)

((Emma.Rumney@thomsonreuters.com; +27115952832;))

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