SAA suspends another exec | Fin24
 
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SAA suspends another exec

Nov 20 2015 10:20
Carin Smith

Johannesburg – South African Airways (SAA) said on Friday it has decided to suspend its chief commercial officer Sylvain Bosc.

Bosc had been placed on “special leave” recently.

Airline spokesperson Tlali Tlali said this step was "pursuant to a forensic investigation by ENSafrica into various allegations that were received through the Deloittes Tip Offs hotline".

According to Tlali it was deemed that the tip-off allegation had enough substance to suggest that Bosc "doctored the numbers for Abu Dhabi to favour the opening of this route and sold SAA out".

SAA, therefore, alleges that Bosc knowingly made misrepresentations to the board by overestimating the figures without substantiating these and ignored network specialist advice”.

In a presentation on SAA made by National Treasury to the standing committee on finance in parliament on Wednesday, the commencement of the Abu Dhabi operations is listed among what was deemed as "numerous significant transactions" that had been "considered and, where appropriate, approved".

Tlali said on Friday the investigation confirmed that Bosc had approved a business case to open a route between Johannesburg and Abu Dhabi. Bosc had input into this business case and had approved it and presented it to the SAA board of directors for approval.

The goal was to use this new route as a gateway to the Far East for SAA passengers into China and India, and would operate at a substantial profit, as the current routes into those destinations were causing losses to SAA in excess of R400m per annum.

In January this year SAA announced that, while its domestic operations remained profitable and grew during the 2013/2014 financial year, and regional African routes performed positively, the group's losses on its long-haul operations grew to R1.6bn.  

READ: 5 reasons why SAA is experiencing turbulence

SAA has had a code share agreement with Etihad Airlines, which commenced in the 2013/2014 financial year, and is still in operation, which indicated that the passenger fares generated from this route are substantially lower than estimates put forward to the board and the minister, according to Tlali.

A former SAA international network planner had allegedly previously warned Bosc that the "exaggerated fare price" that Bosc had used in the calculation, would not be achieved, and that this would cause further losses to SAA.

"Mr Bosch elected to ignore that advice, which subsequently was proven to be correct and the selection of the Abu Dhabi network resulted in substantial continuous losses to SAA," said Tlali.

"The submission to the Board by Mr Bosc amounted to an overestimation of the projected revenue figures and ignored network specialist advice who had advised that the Abu Dhabi route would run at a substantial loss."

Tlali said, based on the non-disclosure of these risks to the board of directors of SAA, and subsequently to the minister of finance, "a business case that was substantially flawed and caused losses to SAA, was approved".

The suspension of Bosc is the latest in what turns out to be a lot shuffling at SAA's top management level.

In July SAA first denied reports that the acting CEO at the time, Nico Bezuidenhout, would be replaced by a new acting CEO. Bezuidenhout took over in November last year when Monwabisi Kalawe was suspended suddenly. Bezuidenhout was then indeed replaced in July - by human-resources manager Thuli Mpshe. Bezuidenhout, who has acted as SAA CEO on two occasions by now, returned to low-cost airline Mango as CEO.

On November 18 SAA announced the appointment of Musa Zwane, the head of the maintenance unit, as acting CEO to replace Mpshe, who, therefore, held the position for less than four months. Zwane is the seventh permanent or acting CEO at SAA in less than four years.

In July chief strategy officer Barry Parsons left SAA and director Anthony Dixon resigned in the meantime. Also in July, SAA's chief financial officer Wolf Meyer resigned, saying he no longer trusted the board or its chair Dudu Myeni. At the time SAA denied suggestions that there is mistrust at the top levels as "an exaggeration of the greatest proportions".

READ: I don't take bribes, says SAA's Dudu Myeni

On Wednesday Myeni told the standing committee on finance she was disappointed that Meyer had decided to resign amid the national airline’s troubling financial situation. She said she had given him 110% support and advocated the extension of his contract. It was board member Yakhe Kwinana who recommended his contract not be renewed.

On Monday pilots of SAA voted overwhelmingly in favour of a vote of no confidence in both the chair and non-executive directors of the board.

ALSO READ: SAA cuts 484 jobs to stabilise turbulent finances

saa  |  aviation  |  airlines
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