Poisoned chalice: SAA gets 7th CEO in 4yrs. HR turnaround, not strategy.

Stability is key to any organisation’s future and the fact that seven leaders have stepped through the doors of South African Airways in less than four years speaks volumes to the situation the state-owned carrier finds itself in. Musa Zwane who headed the airlines maintenance unit replaces Thuli Mpshe as acting CEO. Mpshe was in the position for less than four months, who was promoted from general manager of human resources. While acting CEO Nico Bezuidenhout returned to his role as head of the company’s low-cost unit Mango in July.Other notable departures this year included chief strategy officer Barry Parsons and director Anthony Dixon. The airline is busy implementing a turnaround strategy with Dudu Myeni as the chair but given the continual shift in leadership, it may be a long way off. – Stuart Lowman

By Liezel Hill and John Bowker

(Bloomberg) — South African Airways appointed Musa Zwane as the state-owned carrier’s seventh acting or permanent chief executive officer in less than four years as Chairman Dudu Myeni confirmed plans to renegotiate a deal to lease five A330 aircraft from Airbus Group SE.

Zwane, the head of the airline’s maintenance unit, replaces Thuli Mpshe as acting CEO after she held the position for less than four months. The switch came as Chief Financial Officer Wolf Meyer resigned, one of a series of departures from the company’s senior ranks in recent weeks.


Zwane was appointed “due to operational demands within the business,” SAA spokesman Tlali Tlali said by text message on Tuesday. The company plans to make an announcement later this week regarding the CFO position, he said.

SAA, which has been cutting costs to ease a dependence on government-guaranteed loans, had renegotiated an order for 10 A320 aircraft earlier this year in favor of leasing five more modern A330 models, a plan that was to save about 1.4 billion rand ($97.8 million). The unprofitable carrier has now proposed an alternative proposal whereby Airbus sells the planes to an unidentified South African leasing company, Myeni wrote in Johannesburg-based newspaper Business Day on Wednesday.

Read also: Breathtaking. The world according to SAA chair Dudu Myeni

Currency Fluctuations

“Leasing directly from a South African company will ensure that SAA is not exposed to currency fluctuations, as the lease agreement will be rand-denominated,” she said. “We have informed the finance minister of the offer and the minister has indicated that he is not opposed to the alternative proposals, on condition that the final transaction is in the best interests of SAA.”

SAA has received written formal proposals from financial institutions and banks to arrange the full payment for the five A330 aircraft, Myeni said. She also reiterated a plan to expand “aggressively” in Africa, while defending market share on long-haul routes.

Read also: Cyril hints at new approach to ownership of Eskom, SAA and other SOEs

The company is working to meet conditions set by Finance Minister Nhlanhla Nene before he’ll consider a request for a new credit guarantee. Finalizing the Airbus swap transaction structure was one of the conditions, Treasury spokeswoman Phumza Macanda said Nov. 12. The National Treasury took responsibility for the airline’s turnaround after it was transferred from the Department of Public Enterprises in December.

SAA named human-resources manager Mpshe acting CEO after Nico Bezuidenhout returned to his role as head of the company’s low-cost unit Mango in July. Other departures this year include Chief Strategy Officer Barry Parsons, who left the company in July, and director Anthony Dixon, who resigned this month. Meyer’s departure was “mutually agreed” and the parties have decided not to release any further statements on the subject, Tlali said.

SAA cuts 484 jobs to stabilise turbulent finances

By Matthew le Cordeur

Cape Town – South African Airways (SAA) has reduced its headcount by 484 staff as the airline works to stabilise its turbulent finances.

New acting CEO Musa Zwane told parliament on Wednesday that by freezing all non-critical positions, SAA managed to reduce the headcount from 8 747 to 8 263.

Explaining the dramatic increase in SAA’s headcount from 2010 to 2014, he said that in 2010, 437 employees procured through labour brokers were absorbed into the company and converted into fixed-term contractors, based on an agreement with organised labour. “In 2013, these employees were converted into permanent employees,” he said.

Zwane said SAA wants to be profitable at an operating level in three years and fully profitable in five years.

He said internal factors impacting SAA’s costs include ageing aircraft, a weak balance sheet, legacy transactions such as the A320 deal and staff costs.

“There has not been a capital injection and National Treasury has indicated there will not be any,” he said. “SAA continues to rely on debt funding on the back of government guarantees. This is extremely costly and contributes to the erosion of SAA’s capital base.

“The estimated cost of funding for the 2016 financial year will be in excess of R1bn,” said Zwane. “SAA can be turned around without a capital injection; however, given the current macro-economic environment this will only be likely to occur in five years’ time. We remain hopeful that government will reconsider capital injection.”

Zwane also said there are no plans to cancel the Johannesburg-Durban route either for Mango or SAA flights. “SAA has reduced capacity on this route by 15% year-on-year and carefully aligned its flight schedule together with Mango’s in order to maximise connectivity into SAA’s regional and intercontinental flights, while at the same time covering all possible times of day for the convenience of our point to point passengers.

“The results have met our expectations as the Durban route has now returned to profitability,” he said. “In addition, the board has approved the resuscitation of the Durban-Cape Town route.”


Source: http://www.fin24.com/Companies/Industrial/saa-cuts-484-jobs-to-stabilise-turbulent-finances-20151118

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