Like any good socialist argument, Dudu Myeni believes the way towards survival for SAA is the protectionist route. Cut out the competition, as Ethiopia has done, and make the playing field easier. Surely the last thing South Africa needs is another monopoly? But while Myeni-Zuma, as the EFF call her, seeks protection, Deputy Finance Minister Mcebisi Jonas, who oversees the airline, has a differing view. In a sitting he said that he sees future private equity involvement as part of National Treasury’s plan, but it first requires the airline to become profitable. And while Myeni and Jonas seem to sit at opposite sides of the table, Jonas says he has faith in the new board. And despite some new memeber this one produced a R5.6bn loss and the public is still waiting for someone to be held accountable. Madness, doing the same thing over and over again and expecting a different result, same can be said for having faith in leadership. – Stuart Lowman
By Donwald Pressly*
To privatise, at least in part, or carry out protectionist strategies are the two routes open to save the financially embattled South African Airways. This is the only conclusion one can draw from hours of discussion in the finance portfolio committee of the national assembly which considered the road forward the state owned entity.
Deputy Finance Minister Mcebisi Jonas, said everytime there was a discussion about SAA, another objective was added. But he said the immediate responsibility of the board was to bring back the entity to solvency. “We must desist from confusing the levels of priority, if we fail to bring back the airline to solvency we will have failed the country, quite frankly. That is our view as treasury.” That was the place to start before considering equity partners, privatisation or private sector involvement. He did not mention protectionist measures.
In regard to equity partner, he said: “Whether you call it privatisation…whatever you want to call it… We have taken the view… we will look at private equity as government. We must first ensure that we improve the financial position of the airline. Stabilise its financial position and look at the strategy… and ensure that we have a solid strategy for the airline. Once we are sure about that… then we can start looking at private equity… private participation in the airline. We are not, in principle, opposed to that. It is contained in the presidential review report and treasury is committed to that. There is no debate about that.”
Deputy Finance Minister, Mcebisi Jonas says ANC needs to scrutinise the implementation of its cadre deployment policy in state institutions
— SAfm news (@SAfmnews) September 17, 2016
He continued: “We are not looking at this private participation ideologically.. it is a matter of being pragmatic. If you introduce (reduce) the fiscal burden on the state this is one of the options you have to look at… It has nothing to do with any ideological position.”
But he emphasised that the time was not right for private participation. If it was rushed into now – finding a mechanism for private participation immediately – it would probably be “a disaster”.
Myeni proposes protectionism of SAA
When Dudu Myeni – the woman who was dubbed Dudu Myeni-Zuma by Economic Freedom Fighters’ leader in the national assembly last week in reference to the close relationship she has to President Jacob Zuma – finally arrived at the finance portfolio committee meeting, she spoke very little. But she did suggest that the entity may consider protectionist programmes. She cited the example of Ethiopia where the state only allowed its own airline to operate within the country.
Shivambu: "Ethiopian Airways is the biggest airline in Africa; #SAA was the biggest before Dudu Myeni…"
— Scapegoat (@AndiMakinana) September 20, 2016
Referring to the model of success of other airlines, she said “We discussed this in a previous sitting. What I would also suggest (is) we… to bring the whole aviation framework (to the sitting). Some of the successful airlines are fully supported by their country. Just a classical example, If you fly to Addis Ababa, you are not allowed to do the internal network if you are not a non-Ethiopian airline. You can only offload at the airport. With us (at SAA) the market share (in South Africa) is shrinking because of our airlift strategy.”
It was a policy discussion, she said, noting that she would attach to the SAA report to the parliamentary committee a copy of the aviation policy framework.
If that vision for SAA plays out, it will mean that competing South African airlines in South Africa, including British Airways/Comair and Blue Crane, will simply be taken out of the system. That is the logical conclusion to what Myeni told MPs on Tuesday.
Referring to questions from DA MP David Maynier who asked why she had been re-appointed to the SAA board, she said: “First and foremost the same question was asked… In a previous sitting. I responded comprehensively to the question. I think I will request to the chairperson to do the same. To respond in writing. I want to say for the benefit of the committee. I never appoint myself. The appointment of the board is a cabinet decision.”
Jonas was asked by DA finance spokesman David Maynier whether Finance Minister Pravin Gordhan had also opposed the re-appointment of Myeni to the SAA board. He deflected the question saying that Myeni was the chairperson and MPs should not continue “harping” about individual members on the board, the board was now in place and was fit to do the job of turning the entity around, he believed.
Notably Myeni, who said she had eaten something which had upset her and had to visit her doctor which was why she was late for the hearing, took pains to thank Jonas for supporting her. His continued support was “appreciated”, she said.
Someone will do it for us, says Jonas
Myeni also enthusiastically praised the new board of the embattled SAA – which has just been given a R4.7 billion loan guarantee to ensure it remained a going concern: “I just want to thank the board of SAA… within the two weeks of their appointment the load has been taken off our shoulders. There is an appreciation that the board has (until recently) been lean and thin… a three members’ board.” These members sat on all the board sub-committees which made life for those board members quite difficult.
The new board would be a better board and SAA would be a better airline, she promised.
Kiss transformation goodbye
Meanwhile, Jonas said that it would be naïve to say that transformation in the airline was not a primary project “but within that broad context you cannot run down institutions”. He was responding to questions about racial and gender transformation at the airline.
Turning the airline around financially was “at the centre” of what needed to be focused on. “Everything else we do must be focused on that objective.”
“If you cannot bring the airline back to financial sustainability… you can kiss goodbye any transformation agenda,“ said the deputy minister. “If we don’t deal with institutional transformation, someone will do it for us.. changing the face of our institution, making sure that they are efficient… ensuring that they have credibility… if we don’t do those things… someone will do it for us.”
- Donwald Pressly, Editor of Cape Messenger
