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Johannesburg – Throwing more money at South African Airways (SAA) won’t solve its problems, said former Finance Minister Trevor Manuel.
Manuel was speaking on the management issues the national carrier has been having during a question and answer session at the Deloitte Risk Conference 2017 on Tuesday.
“There are some big decisions about management which have not yet been resolved,” said Manuel. Among the biggest problems is that SAA’s cost structure is wrong, he said.
Some of the contributing factors to the poor cost structure is related to the airline employing too many people. “The pay scales are out of kilter with industry norms.”
Manuel said it is important to have the cost future of SAA dealt with. “These are big decisions we can’t defer. They have been deferred for too long.”
The company’s unanticipated costs are reflected in its annual reports and the airline is susceptible to price fluctuations in aviation fuel and food inflation. Decisions to deal with the underlying issues must be taken, he reiterated.
Other “self-evident” issues at SAA are related to corporate governance. He took aim at the fact that chairperson Dudu Myeni, who had missed six board meetings and still managed to keep the position.
Last week Treasury granted SAA R3bn from the National Revenue Fund to prevent the airline from defaulting on a loan from Citibank. Further details of the refinancing of the airline will be announced at the mini budget later in October.
Chief economist at Econometrix Azar Jammine told Fin24 on Monday that many countries, including the US, have dropped national carriers as there was no strategic benefit to it.
Jammine suggested that the airline or parts of the airline be privatised. “To the extent that SAA is poorly run, private shareholders would ensure it is run more efficiently.”
Privatisation would have the benefit of saving the fiscus from having to use taxpayer money to provide bailouts for the airline, he explained.
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