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Treasury battles to fill SAA vacancy

Jan 15 2017 07:38
Erika Gibson

Treasury is battling to appoint an extra SAA board member with “aviation experience”, at a time when the airline’s turnaround strategy remains in trouble.

An advert calling for aviation specialists to apply was placed by Treasury in December.

This week, Treasury spokesperson Yolisa Tyantsi told City Press’ sister paper, Rapport, that the post was vacant and applications were being considered.

When a new board of directors was appointed three months ago, aviation experts expressed concern that not a single one of them had a background in aviation. And controversial SAA board chair Dudu Myeni retained her post.

No significant changes in structure, flight routes or personnel matters that could improve the income statement have since been announced.

Despite hopes that a new board would begin turning around the situation – which saw losses amounting to R1.5 billion in 2015/16, and R5.6 billion in 2014/15 – critical management posts have still not been filled.

The posts for CEO and for strategic, personnel and financial heads are all filled by acting personnel.

The posts of chief commercial officer, head of Air Chefs – the catering arm of SAA – and the CEO position at low-cost airline Mango are also vacant.

As part of a turnaround plan, Finance Minister Pravin Gordhan declared the appointment of permanent personnel a priority.

SAA spokesperson Tlali Tlali declined to say how many applications were received for the CEO position, but the closing date was extended last week to January 18.

An advert for the position of chief financial officer appeared only last week.

“The minister believes he will be presented with a final short list by the end of the year,” said Tyantsi.

In the meantime, the airline is lurching from one controversy to the next.

On Friday, the Mail & Guardian newspaper reported that Myeni had received a notice from the enforcement unit of the Companies and Intellectual Property Commission stating that she violated two provisions of the Companies Act.

This was because she allegedly misrepresented a board decision about the hiring of aircraft.

Myeni has to confirm that she informed Gordhan and the SAA board about the adverse findings against her before January 31, or she can expect further trouble with the commission.

In addition, SAA is still being plagued by old problems.

This week, Minister of Public Enterprises Lynne Brown confirmed that Bain & Company SA had been contracted to plan the merger and reorganisation of the state’s three airlines: SAA, Mango and SA Express.

Bain & Company was first brought into SAA by then CEO Coleman Andrews in about 2000. At the time, it received more than R350 million in consultancy fees from SAA.

It remains unclear what services they rendered to the airline as Andrews failed to produce reports justifying why so much was spent on consultancies – and failed to disclose his interests in the company as founder of Bain Capital.

Nicola Wilson, spokesperson for Bain & Company SA, said Andrews had not had any connection with the parent company in the US for more than 30 years.

Bain & Company’s local partner in the process is Abacus Advisory, which has been responsible for advancing government’s job creation programmes.

According to Wilson, Abacus is responsible for the civil service, financial legislation and treasury parts of the merger.

She said Bain & Co had been advisers on more than 700 projects globally which included some of the biggest airlines.

Shaun Liebenberg, who helped effect aerospace and defence conglomerate Denel’s financial turnaround during his tenure as CEO, said given the slow pace at SAA, “it is 100% certain that the airline is going to implode”.

According to Liebenberg, who is currently the CEO of IQ Business Ventures, the key requirement for a state enterprise to be successful is for the country’s president, the minister in that portfolio, the board of directors and the CEO to all pursue the same goal.

None of them should be undermining or interfering with the functions of others, he said.

“The only other option that remains is for SAA’s pilots to unite and refuse to work under a dysfunctional dispensation.”

Joachim Vermooten, an aviation expert, said: “It is no use trying to rescue an airline with the wrong people or with lay people.

“The fundamental problems at SAA require rationalisation, restructuring and competence ¬– and somebody who is prepared to make unpopular decisions.”

saa  |  treasury  |  dudu myeni
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