SAA: Gordhan steps in to keep CEO on board
Jarana believes he is not being given enough freedom to pursue airline’s turnaround strategy
In a day of drama, SAA CEO Vuyani Jarana was persuaded on Wednesday not to resign from his position after several weeks of rising tension at the national airline.
The situation at the airline was so charged that public enterprises minister Pravin Gordhan met Jarana on Wednesday and persuaded him to stay.
Jarana, who joined SAA a year ago, wrote last week to the board, indicating his intention to resign unless he could be assured of the board’s full backing.
SAA, which is struggling financially and has lost critical skills, has seen tension escalate between some nonexecutive directors and Jarana. There have been several disagreements about top appointments and
how much executives should be paid. Two board members — Nolitha Fakude and Swazi Tshabalala — have resigned.
A third member is being investigated in connection with tender irregularities dating back to the previous board’s tenure.
Jarana — who is new to the aviation sector and was formerly chief officer of Vodacom Business — says that he believes he is not being given enough freedom to pursue the turnaround strategy and appoint new executives and that he is hemmed in by the board and the public enterprises ministry.
In turn, he has been criticised for failing to appreciate that he reports to a board and does not have unfettered authority.
Gordhan, who met Jarana on Wednesday and had spoken to all the parties involved, said that he had full confidence in Jarana.
“The CEO has agreed to withdraw his letter and agreed to inform the rest of the board in writing of his intention to do so,” Gordhan said in an interview on Wednesday.
Gordhan said that the underlying problems would be further dealt with in the new year.
“When SAA is asking for assistance to keep it afloat, we need maximum confidence in the organisation. The matter has now been resolved and there is no conflict,” he said.
Jarana did not reply to requests for comment. As Jarana and Gordhan met, the SAA Pilots Association stepped in to express support for Jarana, saying that since his arrival he had made crucial interventions and had the capacity to turn the airline around.
“The brutal truth is that SAA needs to hire the best managers who must be held accountable.
“It must also take drastic action to increase revenue and address costs that are out of line with international benchmarks, no matter how politically difficult it may be.
“We are under no illusion about the scale of the task that lies ahead, and we remain supportive of the CEO’s efforts to turn SAA around,” said executive committee member Glen Smith.
Jarana has won respect from many quarters in a short time.
He was the first permanent CEO in two years after years of instability in which the board, headed by Jacob Zuma crony Dudu Myeni, interfered extensively in operations, leading to multiple resignations and dismissals.
Jarana has made progress in cleaning up corruption and unravelling long-term, expensive contracts put in place by previous management.
But he has battled to attract top skills to the airline with few strong candidates prepared to commit to working at SAA, of which the future is uncertain.
Operational difficulties aside, SAA’s most pressing challenge is financial. The airline needs about R17bn in government bail-outs or refinancing from banks, some of it in the next three months if it is to continue operating.
But prospects for additional support from the Treasury in February are bleak. A R5bn appropriation in the October medium-term budget was used to repay bridging finance provided by banks earlier in 2018. Jarana’s turnaround strategy — which is predicated on securing the R17bn in cash or refinancing — has SAA turning profitable by 2021.