South African Airways is offering surplus pilots and cabin crew to major global carriers as part of a bid to cut costs and secure alliances in its three-year turnaround plan.
SAA, as the unprofitable state-owned company is known, needs fewer staff of its own as it scraps under-performing routes, and views the experienced personnel as a path to discussions with potential partners, Chief Executive Officer Vuyani Jarana said in an interview.
“The hiring airline gets ready-made skills and we benefit from a reduction in overheads without people losing jobs,” he said. “We’ve got things they need, but also if they’re able to come through for us, then it’s a win-win.” Talks have been held with Kenya Airways Plc and Gulf giant Emirates, among others.
Jarana is seeking to halt seven straight years of losses, after being appointed SAA’s eighth chief in as many years in November. Measures announced so far include cutting by half the services from the carrier’s Johannesburg base to London and reducing capacity or eliminating destinations within Africa. He wouldn’t say how many pilots and flight attendants might lose their jobs or be available for transfer.
Staff could take up temporary or permanent contracts elsewhere and return if and when SAA resumes growth, according to Jarana, who said it would be “great” if transfers alone could shrink the company to the right size. Outright firings stand to be costly and damaging for a state company in a nation with 27 percent unemployment.
Jarana said SAA has explored pilot transfers to Emirates and Turkish Airlines, two carriers that have most put African operators under pressure by diverting lucrative long-haul traffic to the continent through their own hubs. Closer to home, the company has also held talks with Air Mauritius Ltd. and Kenya Air, whose CEO said last month he’s open to a broader pact with SAA.
“The point is that we’re talking to everybody about collaboration,” Jarana said. Options range from interline ticketing arrangements through reciprocal sales via so-called code-shares to fully-fledged joint ventures.
Ethiopian Airlines Enterprise, Africa’s biggest carrier, could also be a candidate for cooperation, the CEO said. There have been no talks with European discounter Ryanair Holdings Plc, which has held recruitment drives in Cape Town, he said.
One goal of striking partnerships would be partly to tap markets SAA doesn’t serve, the CEO said, adding that further cuts to the route network and fleet will hinge on a review to be completed by the third quarter.
The reduction in London services stemmed partly from the Heathrow airport’s role as a hub for the Oneworld alliance, which SAA is unable to tap as a member of the rival Star grouping, Jarana said. Switching allegiance isn’t the answer as Star delivers valuable links in other markets, he added.
Jarana declined to comment on the possibility of SAA taking over its Mango low-cost affiliate and rival state-owned operator South African Express Airways Pty, which was grounded on May 24, saying the issue is not in the company’s hands at the moment.
–With assistance from Rishaad Salamat and Haidi Lun.
©2018 Bloomberg L.P.