South African Airways (SAA) CEO Vuyani Jarana recently resigned from the struggling state-owned enterprise, exacerbating the instability at the company.
In his resignation letter, Jarana highlighted many problems at SAA, including mounting debt and a lack of support from the government in helping with its long-term turnaround strategy.
Jarana said a large part of the R5-billion bailout it received from the government for this financial year has already been used to pay creditors.
He said the SAA’s financial position is so dire that the airline was very close to not paying salaries on three occasions.
SAA has now requested another R4 billion from the government in an attempt to keep the struggling airline afloat.
The airline continues to operate at a loss and has a R3.5-billion short-term loan which will be depleted at the end of June 2019, along with a long-term R9.2-billion loan.
More instability at SAA
In the latest development, SAA employees want Jarana to be reinstated along with removing the whole board.
Two unions – the National Union of Metalworkers of South Africa (NUMSA) and the South African Cabin Crew Association (SACCA) – picketed at major airports on Tuesday in protest against problems at the company.
The pickets at OR Tambo, King Shaka, Cape Town, and East London focused on various problems, including:
- The resignation of CEO Vuyani Jarana, who they want reinstated.
- Corruption of SAA Technical management.
- Allegations of nepotism and tribalism at the airline.
- Problems in SAA’s maintenance department.
NUMSA and SACCA want Jarana to be reinstated within 48 hours and to receive the needed support from the government to implement his turnaround plan.
An unfixable mess
The Organisation Undoing Tax Abuse (Outa) said Jarana’s resignation is a symptom of an unfixable mess that will require a completely new approach to fix the company.
“The past 11 years have seen the government pump around R50 billion into the airline to keep it afloat,” Outa executive director Heinrich Volmink said.
He said South Africa simply can’t afford to keep SAA as a wholly government-owned entity.
“Just as we did with Telkom, the time has arrived to allow an external partner with experience in efficient airline management to take a stake in the airline, if it is going to survive.”
If we are to recover economically, South Africa cannot afford to lose more money on failing state-owned entities.
Strong and experienced leaders needed
Outa said it is not surprised by Jarana’s resignation given the obstacles he faced in carrying out his duties.
Outa said airlines are complex entities that require strong and highly-experienced leadership to manage and compete with other operators.
“It is a highly competitive industry and the new SAA leadership will need to act efficiently, independently and in the interest of the airline,” said Volmink.
He said the leadership will also need the freedom to act without political interference to run SAA profitably.