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SAA’s Vuyani Jarana quits

Citing a lack of funding and drop in government support for the carrier’s turnaround plan.

South African Airways chief executive officer Vuyani Jarana quit the financially stricken state-owned company, citing a lack of funding and drop in government support for the carrier’s turnaround plan.

The former Vodacom Group executive was brought in about 18 months ago to lead a recovery at the airline, which has been unprofitable since 2011 and mired in mismanagement and corruption scandals. But a lack of clarity on state funding and the slow nature of decision-making processes persuaded him to resign, according to a letter sent to SAA chairman Johannes Bhekumuzi Magwaza seen by Bloomberg.

“Lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed,” according to the letter. Finance minister Tito Mboweni has made clear the government is reluctant to approve a further outlay, saying he favours shutting down the company.

Calls made to Jarana’s mobile phone went straight to voicemail, while SAA spokesman Tlali Tlali said a statement would be issued later. The resignation was first reported by the Fin24 website.

“The SAA board is dealing with the CEO matter,” Pravin Gordhan, minister for Public Enterprises, said by text message.

‘Key risk’

The move highlights the extent of the challenge facing President Cyril Ramaphosa, who has pledged to clean up state companies and restore their financial health as he starts a new five-year term. Ratings companies and the nation’s auditor-general have called the parlous finances of state entities as a key risk to the economy.

Jarana’s announcement follows that of Eskom CEO Phakamani Hadebe, who said he would leave the debt-laden power utility after just 16 months due to the “unimaginable demands” of the job. Transnet, the state-owned ports and rail operator that’s also been linked to multiple graft allegations, is also looking for a permanent leader.

SAA secured a R5 billion bailout in the October mid-term budget to help it repay loans, but a further commitment hasn’t been forthcoming, according to Jarana’s letter. That’s made it hard to secure cash from outside lenders, and the airline has approached Bank of China and African Export-Import Bank about funding.

Read: SAA nears debt rollover agreement with lenders

Meanwhile a R3.5 billion bridge facility from local banks expires this month, Jarana said.

“The resignation letter appears to strongly suggest that the airline is being forced into administration, deliberately or indirectly, by government,” Peter Attard Montalto, the head of capital markets at research company Intellidex, said by phone from London.

© 2019 Bloomberg L.P

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You cannot run an airline always expecting the taxpayers to bail you out year after year.

Maybe change the plan that you do not have to go to Govt.

I’m sorry. ‘lack of funding and government support’. SAA is the largest recipient of bail outs and state guarantees. What did this fool think he was signing up for. Oh… Right. A few months of that sweet CEO pay followed by a golden handshake.

Those of you who like selfies, you might be well advised to start taking more of those before this Big Bird go to the knackers!

Eish, the airline industry she is tough, I should read more in the library before taking up CEO position.

I believe and suspect that SAA is being deliberately mismanaged by these political appointees as and active act of sabotage so that the govt. can be convinced that it must be sold. Instead of being a National carrier, some of these individuals with their Bossasa type of ‘gifts’ are trying to get the ‘public good’ (Nationally owned airline) that it SAA to develop such a bad reputation that the ‘public’ no longer wants to fund it, and then, those same politicians will turn out to be the biggest minority (BEE) shareholders (in consortiums) of the shares of the new company to be listed on the stock exchange. C’mon people this is not rocket science! It’s saw obvious even Steve Wonder can easily say, ‘now I see.’

Hold on a bit…lack of government support can also mean government’s failure to back management when they want to take the proper corrective action.

The SABC board resigned en masse when govt stopped them retrenching 1000 heads, and Pravin insisted on a salary increase at Eskom when management was correctly offering zero.

Government wants to have it’s cake and eat it. Add these items to their long list of economic fantasies like you can have a mining industry and the mining charter, or you can grow the economy and not import skills, and you can do EWC without impacting the economy negatively… The list goes on…and what you have is some sort of mental block that stands in the way of any progress, and which they are incapable of removing.

I wouldn’t give 1000 to 1 on government fixing any SOE

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