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SAA task team set up

Oct 15 2012 13:35

Johannesburg - A task team has been set up to advise on a turnaround strategy for SA Airways, Public Enterprises Minister Malusi Gigaba said on Monday.

It was "pivotal" that the airline be immediately stabilised, he told reporters in Kempton Park.

The briefing followed the national airline's annual general meeting.

The task team would include newly-appointed SAA chairperson Vuyisile Kona and the CEOs of SA Express and Mango.

It would have to report back to Gigaba by December 15 on the "critical success factors" needed to turn the airline around.

SAA reported a R1.3bn operating loss for the year ended March 31.

Gigaba said SAA had performed below expectations for the financial year and had fared more poorly than its global peers.

The airline reported R128m in irregular expenditure - up R85m on the previous year.

Gigaba said this was concerning as it "reflects weak internal controls".

He was also concerned about wasteful expenditure of R4m for the year.

SAA CEO Siza Mzimela and two other senior managers, corporate affairs general manager Theuns Potgieter and general manager for legal, risk and compliance Sandra Coetzee, resigned from the airline earlier this month.

This came barely two weeks after most of the board - including chairperson Cheryl Carolus - also quit, saying there was a lack of support from its shareholder, the public enterprises department.

Gigaba did not consider this a problem, as the board was due to be replaced after the AGM and "a fresh perspective was required to stabilise the airline".

"I am confident... that there is absolutely no crisis," he said, adding that SAA had received over R10bn in support from government in the past 10 years.

In early October, the National Treasury announced that SAA had been given a R5bn government guarantee for a recapitalisation exercise. This would enable it to borrow from financial markets and to buy new aircraft.

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