SAA must be recapitalised | Fin24
 
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SAA must be recapitalised

Oct 22 2017 06:00
Justin Brown

The most pressing issue for SAA is to be recapitalised, even while the appointment of a new chairperson and six board members has been welcomed.

Finance Minister Malusi Gigaba this week appointed JB Magwaza as the new SAA chair, replacing longtime incumbent Dudu Myeni.

Magwaza is founder and executive chairman of Nkunzi Investment. He has served as chairman for a number of companies, including: Tongaat-Hulett; Dorbyl; Mutual & Federal Insurance; and South Ocean Holdings.

He is currently chairman of Imbewu Capital Partners and Delta Property Fund.

New SAA CEO Vuyani Jarana will be joining the bankrupt airline next month.

SAA appointed Peter Davies as its chief restructuring officer and he took office on October 16.

SAA spokesperson Tlali Tlali said Davies’ duties would include assisting management with the implementation of strategic initiatives to meet the set goals.

“He will also be expected to transfer skills to management during his tenure as he has a track record of having worked on implementing many turnaround plans with many airlines,” Tlali added.

Aviation analyst Joachim Vermooten said that the new board would probably be more cohesive than in the past.

The governance of SAA could see a significant improvement, he added.

Vermooten said it was welcome that a number of businesspeople were selected for the SAA board, including Magwaza; Nolitha Fakude, who is SAA deputy chairperson; chartered accountant Tinyiko Mhlari; Geoff Rothschild, a former JSE chairman; and Martin Kingston, who is deputy chairman of Rothschild in SA.

That board will also include aviation expert Ahmed Bassa.

“SAA needs to be run along business lines,” Vermooten said.

A major issue for SAA was that it required almost R12 billion, even after the R5.2 billion in bailouts this year, Vermooten said.

SAA was in a dire situation, he said.

Gigaba has been trying to find a way to recapitalise SAA, including selling the government’s almost 40% stake in Telkom, which was worth more than R11 billion, on Friday.

He is likely to make clear how SAA will be recapitalised when he delivers the medium-term budget policy statement in Parliament this week.

Another cost likely to be borne on top of the R12 billion was SAA’s restructuring to reduce the scale of the airline and staunch its losses, Vermooten said.

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