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Dear CEO
Welcome to the hottest seat in the house. There are a few things you need to understand when you take over this airline. The first is that you’re probably the government’s last throw of the dice.
After the shenanigans of last year it’s going to be very difficult for the government to justify keeping the airline going again if you had to be unsuccessful at turning the airline around. And it’s not going to be easy to do that.
You’re inheriting an airline where the numbers are shocking.
Over the past ten years since 2002/2003 SAA has made a combined loss of R15.6bn. That includes 5 years of losses of which the smallest was R820m and 5 years of profits of which the largest was R728m.
Read that again. The biggest profit was R100m less than the smallest loss. The balance sheet has been wiped out and you’re getting a fleet of old aircraft that chows fuel like nobody’s business. So you need new aircraft to make more money but you have no money to buy new aircraft.
That’s the bad news.
The good news is that the government still supports the airline.
And the mess you inherit is not your mess, meaning you can clean it all up. It certainly is possible to turn the airline around. If you step up to the challenge and you listen to the people that matter (and with a little more help from your shareholder) it’s perfectly doable.
Some advice
Before accepting the offer to run the top airline in Africa, you may want to check with your new bosses about how much money they’ll make available to you, given the large amounts of money the airline needs.
It’s going to be very difficult to talk money with the shareholder after you officially become the boss. And take it from me, you are going to need to go begging within weeks if not days at the helm.
The airline is probably not savable without loads more money from the government. So good luck with that!
On this note, you may also want to warn your spouse and family that you may be in for a tough ride from fellow taxpayers if you do ask and get more money.
You’re going to need the public on your side, so customer satisfaction and excellent service from all your staff is going to be critical. Nothing less will do.
Linked to this of course is baggage pilferage. You’re going to have to watch this bad boy. People don’t like flying SAA only to get to their destination with no suitcase. Twice.
Another tip is that you may want to check how far the government is willing to go. It is simply impossible to save the SAA whilst the government also demands a developmental mandate from the airline.
This means you need to tell your bosses upfront that you may need to freeze all training and that you may need to fire a thousand or two employees. It’s a harsh, horrid thing to do, but there’s probably no alternative if you wish to save the airline.
Again, this will not be possible without government approval.
SAA has some of the best pilots in the world and its employees have all done a remarkable job keeping the airline going while management is causing havoc, but job cuts are inevitable, I think... if you want to save the airline. So be friendly with the unions too.
A last bit of advice is that you, while doing all the above, should forget about all bonuses. And if your executive pay package is too high, that’s not going to help you either.
For a few years you’re going to need to work for no bonus and less pay than your predecessors (only then will you manage to get staff on your side) whilst you’re righting the ship. It’s going to be hard work and it may not pay as much as you’d like. But it’s the truth.
Finally, I hope you’ll commit to sticking this one out for the long haul. It’s no use you leave SAA in a year or even two for a top government (or private sector) job elsewhere. The airline needs a committed CEO, prepared to stick it out till the numbers are steady and on the up.
It’s going to be a tough slog and you’re going to be very unpopular, probably for a long time. But if you do this right, the world’s your oyster.
Good luck and all the best
Just another taxpayer
*Follow James-Brent Styan on Twitter at @jamesstyan.
Welcome to the hottest seat in the house. There are a few things you need to understand when you take over this airline. The first is that you’re probably the government’s last throw of the dice.
After the shenanigans of last year it’s going to be very difficult for the government to justify keeping the airline going again if you had to be unsuccessful at turning the airline around. And it’s not going to be easy to do that.
You’re inheriting an airline where the numbers are shocking.
Over the past ten years since 2002/2003 SAA has made a combined loss of R15.6bn. That includes 5 years of losses of which the smallest was R820m and 5 years of profits of which the largest was R728m.
Read that again. The biggest profit was R100m less than the smallest loss. The balance sheet has been wiped out and you’re getting a fleet of old aircraft that chows fuel like nobody’s business. So you need new aircraft to make more money but you have no money to buy new aircraft.
That’s the bad news.
The good news is that the government still supports the airline.
And the mess you inherit is not your mess, meaning you can clean it all up. It certainly is possible to turn the airline around. If you step up to the challenge and you listen to the people that matter (and with a little more help from your shareholder) it’s perfectly doable.
Some advice
Before accepting the offer to run the top airline in Africa, you may want to check with your new bosses about how much money they’ll make available to you, given the large amounts of money the airline needs.
It’s going to be very difficult to talk money with the shareholder after you officially become the boss. And take it from me, you are going to need to go begging within weeks if not days at the helm.
The airline is probably not savable without loads more money from the government. So good luck with that!
On this note, you may also want to warn your spouse and family that you may be in for a tough ride from fellow taxpayers if you do ask and get more money.
You’re going to need the public on your side, so customer satisfaction and excellent service from all your staff is going to be critical. Nothing less will do.
Linked to this of course is baggage pilferage. You’re going to have to watch this bad boy. People don’t like flying SAA only to get to their destination with no suitcase. Twice.
Another tip is that you may want to check how far the government is willing to go. It is simply impossible to save the SAA whilst the government also demands a developmental mandate from the airline.
This means you need to tell your bosses upfront that you may need to freeze all training and that you may need to fire a thousand or two employees. It’s a harsh, horrid thing to do, but there’s probably no alternative if you wish to save the airline.
Again, this will not be possible without government approval.
SAA has some of the best pilots in the world and its employees have all done a remarkable job keeping the airline going while management is causing havoc, but job cuts are inevitable, I think... if you want to save the airline. So be friendly with the unions too.
A last bit of advice is that you, while doing all the above, should forget about all bonuses. And if your executive pay package is too high, that’s not going to help you either.
For a few years you’re going to need to work for no bonus and less pay than your predecessors (only then will you manage to get staff on your side) whilst you’re righting the ship. It’s going to be hard work and it may not pay as much as you’d like. But it’s the truth.
Finally, I hope you’ll commit to sticking this one out for the long haul. It’s no use you leave SAA in a year or even two for a top government (or private sector) job elsewhere. The airline needs a committed CEO, prepared to stick it out till the numbers are steady and on the up.
It’s going to be a tough slog and you’re going to be very unpopular, probably for a long time. But if you do this right, the world’s your oyster.
Good luck and all the best
Just another taxpayer
*Follow James-Brent Styan on Twitter at @jamesstyan.
