Loss-making SAA hires Vodacom exec Vuyani Jarana as new CEO

By Arabile Gumede and Loni Prinsloo

(Bloomberg) – South Africa’s National Treasury confirmed the appointment of Vodacom Group executive Vuyani Jarana as the first permanent chief executive officer of the state-owned carrier since November 2015.

Jarana will take the helm at South African Airways when Vodacom releases him of his duties, the Treasury said in an emailed statement on Thursday.

The debt-laden airline has failed to make a profit since 2011 and was handed a bailout last month after National Treasury transferred funds to help it avoid a default on its debt to Standard Chartered Plc. Finance Minister Malusi Gigaba said that the assistance given to SAA, was dependent on naming a new chief executive and for the airline to implement a “strict” turnaround strategy.

“We believe he will be key in turning around SAA” given how he improved the performance of the Vodacom Business Africa unit, Gigaba said in Thursday’s statement.

The national airline is one of several key state companies and agencies that are in disarray as a high turnover of senior management hobbles their ability to take decisions and massive losses threaten their financial viability. SAA will brief lawmakers in Cape Town on Friday on its quarterly report.

Bigger Challenges

“SAA presents challenges much bigger than Mr. Jarana has ever faced before,” Alf Lees, a lawmaker for the opposition Democratic Alliance, said in an emailed statement. Jarana would have to “ruthlessly cut the bloated cost structure that is dragging the airline into liquidation,” he said.

Vodacom spokesman Byron Kennedy wouldn’t immediately comment when contacted by phone. Jarana’s mobile phone went to voice mail.

A logo sits on display outside the headquarters of Vodacom Group Ltd. in Johannesburg, South Africa, on Monday, May 18, 2015. Vodacom, the wireless carrier with the most subscribers in South Africa, said full-year earnings declined as increasing competition weighed on calling prices. Photographer: Dean Hutton/Bloomberg

Jarana was previously the chief operating officer of the Johannesburg-based wireless carrier and has been the head of its enterprise division since 2012. Musa Zwane, SAA’s chief technical officer, has been the airline’s temporary leader and is the seventh permanent or acting CEO since 2010.

“In an organization as complex as SAA, one person in a leadership position is not going to be sufficient if he hasn’t got 100 percent support from the board,” Iraj Abedian, chief executive officer at Pan-African Investments and Research Services in Johannesburg, said by phone. “Many of the problems at SAA over the past 10 years have emanated from the board.”

Vodacom is the market leader in South Africa with 37 million subscribers in the country. It is 65 percent owned by Vodafone Group Plc and has customers in Tanzania, Mozambique and the Democratic Republic of Congo.