SAA must now leave turbulence behind
South African Airways (SAA) has managed to navigate through three major hurdles to ensure it does not nosedive into financial distress: a new CEO has been appointed, the chief restructuring officer has finally come on board and Finance Minister Malusi Gigaba has rid the national carrier of its longtime chairwoman.
New CEO Vuyani Jarana will report for duty on November 1, as had been stipulated by lenders, while Peter Davies has received an official letter of appointment as chief restructuring officer and begun his duties from London.
A chief commercial officer appointment is also set to be made soon.
SAA has thus fulfilled three of the preconditions domestic lenders had set for the roll-over of billions of rand to the end of October. The lenders had also stipulated a December deadline for the appointment of a new chairperson, but those close to Gigaba dispute this.
Eyes will now be cast on the medium-term budget policy statement next Wednesday, when Gigaba is expected to announce a multibillion-rand capital injection for the airline, which has for years been wracked by board and management instability.
SAA has a bit of breathing room now that Dudu Myeni is no longer at the helm of its board, but there remain several boxes it has to tick before it is out of the woods.
The airline’s going-concern status is still a matter of debate and hinges on the consortium of local lenders — the four major banks and smaller operators — rolling over their debt to March 2019 and possibly beyond.
But that will depend on SAA fulfilling its end of the bargain by getting its house in order, starting with management and board stability so that the airline can implement its long-term turnaround strategy in earnest.
The lenders will have to be paid a portion of the capital injection SAA is set to get next week, and one of the key conditions for them considering extending their debt maturity to March 2019 is that Jarana and his team implement the airline’s strategy and bring a level of stability to its finances.
The announcement of the new board on Thursday was broadly welcomed.
There was an overall sense that the six new members would pilot the airline in the right direction while also giving management room to run SAA’s operations.
Standing committee of finance chairman Yunus Carrim wished the board well but also pointed out that it had to work as a collective.
South African Airways Pilot Association vice-chairman Grant Back said it hoped that the “dark days of ... Ms Myeni ... are over”.
He said: “The association welcomes the new chairperson and the new board appointees, and looks forward .... The pilots hope this board will act in the best interest of the airline and its employees.”
Myeni; her deputy, Tryphosa Ramano; Gugu Sepamla; Mzimkulu Malunga; Siphile Buthelezi and Nazmeera Moola got calls from director-general Dondo Mogajane and other officials in the finance ministry on Wednesday morning, informing them that their services were no longer required at SAA.
SAA spokesman Tlali Tlali said that the airline “will file the required notice with the Companies and Intellectual Property Commission (CIPC) once all the formalities for the directors’ appointments and terminations have been dispensed with. The notification to CIPC will be done within 10 business days after the date of appointment or termination.”
New chairman JB Magwaza; his deputy, Nolitha Fakude; Geoff Rothschild; Ahmed Bassa; Tinyiko Mhlari and Martin Kingston were officially announced on Thursday as the new board appointments. They join Swazi Tshabalala, Peter Tshisevhe, Thandeka Mogoduso, Peter Holmes Maluleka and Akhter Moosa.
Mayihlome Tshwete, Gigaba’s spokesman, said the minister had invoked his discretion in instituting the boardroom sweep, adding that Gigaba had long stated he was seeking to make the changes.
Magwaza was seen as the main person to oversee the transition period, while Fakude was tipped to become eventual board chair. But the glue who will make it all stick is Jarana, whose appointment was effected by the previous board.