The case by pilots at SAA for an increase in the retirement age from 60 to 65 years got a boost recently from the revision of the retirement age limit by the International Civil Aviation Organisation (ICAO), a UN agency.
The ICAO council on March 10 agreed to amend the retirement age limit for commercial pilots.
The new limit comes into effect on November 23.
SAA pilots have been demanding that their retirement age be increased from 60 to 65 years. But SAA has refused, citing among other things, the fact that some countries have laws that prohibit aircraft in their territories if their pilots are over the age of 60.
The ICAO amendment kills SAA's argument. But it also increases the options for some of the older SAA pilots to look for work in other countries because the additional five years before they can be retired makes it worth the while for other airlines to hire them.
The changes to the retirement age for pilots are being driven by the shortage of pilots. A number of countries had on their own increased the retirement age from 60 to 65 to ease the shortage of pilots.
The Wall Street Journal reported last Friday that Boeing had pegged the demand for new pilots at 18 000 a year until 2024.
The shortage of pilots is being magnified by the growth of the airline industries in India and China. India is seeing double digit growth in its domestic air traffic market after the industry was opened up to competition.
The shortage of pilots creates a serious headache for airline companies though because the shortage strengthens their ability to bargain for better pay packages. Pilots already account for a big share of airline's labour costs.
Total labour costs account for between 15 percent and 40 percent of airline's operating costs. Of these costs, the biggest chunk is taken up by pilots.
SAA spends upwards of R750 million a year paying its pilots. The airline's 800 pilots account for 7.3 percent of its 11 000 employees, their pay ate up about 25 percent of SAA's total labour costs of R3.2 billion in the year ended March.
The ICAO amendment and the global shortage of pilots will tip even further the balance in favour of SAA pilots.
Chairman Danie Cronje assured shareholders at yesterday's annual general meeting that the group would conduct a due diligence exercise on the African assets being acquired from Barclays and ensure that Absa was not paying too much for them. Cronje's remarks were in response to concerns raised by a shareholder who noted that given the relationship that exists between Barclays and Absa, there might not be sufficient checks and balances to ensure that Absa minority shareholders were not being disadvantaged by overpaying for Barclays' Africa. Barclays holds 60 percent of Absa.
Shareholder activist Theo Botha also raised concerns about possible conflicts of interest resulting from Absa's new executive compensation plan. In terms of the new plan, six of Absa's top executives will be allocated Barclays' shares if they achieve the performance objectives that were set out in Barclays' business case for the acquisition of a controlling stake in Absa.
The rationale for the new plan is "that the incentive is specifically designed to drive the objectives of Barclays for the business", according to the annual report.
Botha told the meeting that this plan put the six executives in an invidious position as it encouraged them to manage the group in a way that would be to the advantage of Barclays but could be to the disadvantage of the 40 percent minority shareholders in Absa.
He stressed that in terms of good corporate governance, executives should only have one paymaster and not two as was the position following the creation of the new remuneration plan.
David Brink, who chairs Absa's remuneration committee, said that the situation had been considered very carefully and it was felt that the achievement of the performance conditions would arguably benefit all Absa shareholders.
Botha also raised concerns about the resolution allowing Absa to repurchase up to 20 percent of its shares and noted that a full 20 percent repurchase could result in Barclays increasing its stake to 76 percent from 60 percent.
Such an increase in Barclays' stake would have been achieved with Absa's funds.
Cronje replied that he accepted Botha's point and would consider it.
A second shareholder questioned why shareholders were not being asked to vote on the reappointment of the auditors, Ernst & Young and PricewaterhouseCoopers.
Following the Barclays transaction, PricewaterhouseCoopers had replaced KPMG as Absa's joint auditor. The shareholder said that in the wake of the Brett Kebble saga, in which PricewaterhouseCoopers had some involvement, he had problems with that firm.
Cronje replied that in terms of the Companies Act, Absa was not required to get shareholder approval for the reappointment of auditors.
If Tongaat-Hulett's experience is anything to go by, AECI shareholders can expect a windfall from the development of the company's land holdings, which are now excess to its operational requirements. AECI plans to release 715ha of land in Sommerset West for commercial development. AECI also owns land in Modderfontein, part of which has been developed.
Tongaat-Hulett's Moreland division was the biggest contributor to group profit in financial 2004, helping carry the group through a rough patch when its other divisions reported reduced profits. It did well last year, although it was the second-biggest contributor to profits after the sugar division.