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Massive cost cutting from SAA’s restructure?

19 Aug 2019 - by Sarah Robertson
Comments | 0

SAA is restructuring its

organisational design to

drastically cut costs and put a

structure in place that it says

will foster effective decisionmaking and accountability.

The new SAA group

operating model will divide

the airline into three business

units. The Domestic unit will

include Gauteng, Western

Cape, Eastern Cape and

KwaZulu Natal; the Regional

unit will be split into SADC,

East Africa and West and

Central Africa; while the

International unit will consist

of Regional Americas,

Regional Europe and Regional

Middle East and Asia Pacific.

Each area will be accountable

for its own load factors,

passenger numbers, RASK,

CASK, Margins, EBIT, NPS,

OTP, sales and break even

KPIs.

SAA ceo, Vuyani Jarana,

said the majority of

decisions had been made

locally in South Africa in the

past. The new operating

model will now launch

accountable teams focusing

specifically on improving

profitability per region.  

Peter Davies, chief

restructuring officer at SAA,

says if one considered that

70% of SAA’s income was

generated outside South

Africa, it made sense to

allow international country

managers and their teams

more scope to make

decisions.

SAA revealed that its

organisational design project

commenced internally in

November with the airline

stating that its restructure

was expected to save

between R251m and R460m

during the 2019-2020

financial year alone.

Vuyani said as part of

the restructure, SAA had

been pursuing a number of

socially responsible ways

to address the airline’s

overstaffing problem. SAA’s

crew exit programme, which

has facilitated the airline’s

pilots and cabin crew to take

up a number of temporary

positions with other airlines,

is one example of this.

Vuyani said it assisted SAA

with short-term cost-cutting

but that the staff members

were not lost to the airline in

the long run. He added that

socially responsible options

such as early retirements,

sabbaticals and alternative

leave policies were also being

considered.

Currently the SAA group

employs about 9 500 people

with about 5 000 of these

falling under SAA itself

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