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SAA still searching for equity partner

Nov 07 2017 15:00
Tehillah Niselow

Johannesburg - Finance Minister Malusi Gigaba said on Tuesday that cash-strapped South African Airways (SAA) was still searching for a strategic equity partner.

“SAA needs a new fleet, this money won’t come from the fiscus and it won’t come from the [airline] revenues", Gigaba said

He was speaking at a press briefing at SAA's head office in Kempton Park following a meeting with the new board and executive team.

Discussions are, however, still at an early stage and government - as SAA’s sole shareholder - will decide what percentage the equity partner will take.

“Many have shown interest. They range from airlines to financial institutions to other investors,” Gigaba said.

New SAA board chairperson JB Magwaza said the board has to consider the financial difficulties the national carrier currently finds itself in when deciding on an equity partner.

He acknowledged that SAA's performance hasn't created a “sexy organisation” and the board will have to take this into account.

READ: New SAA board in place, Treasury confirms

Gigaba promised there wouldn't be any "underhanded or in the dark" engagements around the strategic equity partner.

Clear delineation of roles

Gigaba promised a “clear delineation” of roles between the new SAA board, the executive management team, and the shareholder.

He said this was to avoid “stepping on toes”. Roles should and would be clearly defined, with the new CEO Vuyani Jarana acting as “the main spokesperson for [the] airline, not the board”.

Gigaba's meeting with the board members and executive management was to outline how to expects of them to turn the embattled national carrier around. He also met and addressed staff members in the building, to loud cheers.

The board will undergo induction and members have until December to come up with a cost containment plan to present to Gigaba, while Jarana is expected to come up with measures to “re-estbalish confidence in SAA”, Gigaba said.

INTERVIEW: SAA seeks investor to revive its fortunes - CEO

Magwaza committed to not interfering with executive functions, saying “one of the things that has been a problem at SAA is the blurring of roles between board, executive and the shareholder”.

Magwaza was announced as Dudu Myeni’s replacement on 20th October 2017, in a board shakeup by Cabinet.

In Myeni’s tenure as chairperson of the national carrier between 2012-2017, she clashed with several CEOs who accused her of trying to interfere in operational matters.

Financial statements

SAA’s annual results foe the financial year 2016/2017 have been handed over to Auditor General Kimi Makwetu. Gigaba said they should be approved by December 7 and the Annual General Meeting will be held before January 28 2018.

The AGM was scheduled to take place on November 3, but was delayed as SAA was not deemed a going concern, and needed government’s cash injection of R10bn to continue operating and to meet its debt obligations.

Gigaba warned board members that the airline's practice of delaying the tabling of its financial results “must come to an end”, in the next financial year.

Recapitalisation

Treasury has already transferred R5.2bn to SAA in order for the airline to meet its debt obligations and pay for operational expenses.

Gigaba said government had committed to funding SAA with R10 billion until the end of the financial year, and R4.8 billion more will be transferred in tranches of R1 billion a month from November until the end of March 2018.

Magwaza, meanwhile, said he expected a couple of months of hard work ahead for the board members.

“We’re at the brink. We either fall over or we pull back from the brink. For us as a board, we’re pulling back."

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