There’s what seems a CEO exodus in South Africa which has spread from the private sector into government. Within a few days more than a handful of high level executives either quit, of were forced from their positions, from JSE-listed companies. The same has happened with the state-owned companies as Vuyani Jarana quit as CEO of South African Airways earlier, not long after Phakamani Hadebe left his role at Eskom. At first Hadebe cited health reasons, but news has started to filter through that he left due to a lack of government support in driving the turn around at the energy utility. And according to Jarana’s resignation letter, the reason for throwing in the towel are on those same lines. Public Enterprises minister Pravin Gordhan must be scratching his head, because given the reasons both left, you’d be hard-pressed to find someone to take a role that doesn’t have buy-in from those at the top. And the longer SAA is left rudderless, many calling it a vanity project, the less valuable it becomes for any potential suitors… – Stuart Lowman
South African Airways CEO quits over lack of state support
(Bloomberg) – South African Airways Chief Executive Officer Vuyani Jarana quit the financially stricken state-owned company, citing a lack of funding and drop in government support for the carrier’s turnaround plan.
The former Vodacom Group Ltd. executive was brought in about 18 months ago to lead a recovery at the airline, which has been unprofitable since 2011 and mired in mismanagement and corruption scandals. But a lack of clarity on state funding and the slow nature of decision-making processes persuaded him to resign, according to a letter sent to SAA Chairman Johannes Bhekumuzi Magwaza seen by Bloomberg.
“Lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed,” according to the letter. Finance Minister Tito Mboweni has made clear the government is reluctant to approve a further outlay, saying he favours shutting down the company.
Also read: Selling off SAA to end the kamikaze dive – FMF backs Mboweni
Calls made to Jarana’s mobile phone went straight to voicemail, while SAA spokesman Tlali Tlali said a statement would be issued later. The resignation was first reported by the Fin24 website.
“The SAA board is dealing with the CEO matter,” Pravin Gordhan, minister for Public Enterprises, said by text message.
‘Key risk’
The move highlights the extent of the challenge facing South African President Cyril Ramaphosa, who has pledged to clean up state companies and restore their financial health as he starts a new five-year term. Ratings companies and the nation’s auditor-general have called the parlous finances of state entities as a key risk to the economy.
Jarana’s announcement follows that of Eskom SOC Holdings Ltd. CEO Phakamani Hadebe, who said he would leave the debt-laden power utility after just 16 months due to the “unimaginable demands” of the job. Transnet SOC Ltd., the state-owned ports and rail operator that’s also been linked to multiple graft allegations, is also looking for a permanent leader.
Also read: Give us three years to wipe out our crippling losses – SAA execs
SAA secured a R5bn ($342m) bailout in the October mid-term budget to help it repay loans, but a further commitment hasn’t been forthcoming, according to Jarana’s letter. That’s made it hard to secure cash from outside lenders, and the airline has approached Bank of China and African Export-Import Bank about funding.
Meanwhile a R3.5b bridge facility from local banks expires this month, Jarana said.
“The resignation letter appears to strongly suggest that the airline is being forced into administration, deliberately or indirectly, by government,” Peter Attard Montalto, the head of capital markets at research company Intellidex, said by phone from London.
