SAA boss mum on whether Zuma intervened to stop SAA-Emirates deal

2015-09-03 12:14
SAA chairperson Dudu Myeni. Picture: Muntu Vilakazi/City Press

SAA chairperson Dudu Myeni. Picture: Muntu Vilakazi/City Press

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Dudu Myeni, chairperson of South African Airways refused to say in Parliament whether President Jacob Zuma called her personally to stop an agreement between SAA and Emirates airline. 

Myeni and the top management of SAA were yesterday hauled over the coals by the standing committee on finance over the continuing instability at SAA. 

Members of the portfolio committee, as well as its chairperson Yunus Carrim, expressed dissatisfaction with the top management of SAA’s poor preparation and “glib” answers regarding their report on the turnaround at SAA. 

This is, according to Myeni, the ninth turnaround strategy at the beleaguered airline. 

According to Wolf Meyer, SAA’s financial chief, the airline will again declare a loss next month, although the airline’s operating results had improved year-on-year by 43%. 

He said the airline had saved R2.2 billion over the past three years. The target was to reduce costs by 30%, and 17% of the target had been achieved over the past three years. 

SAA planned to reduce costs by an additional 13% over the next three years. 
Meyer said there were “some historical issues” that were “hurting us”. 

He referred to the contract for the purchase of 20 new Airbus A320s. The transaction was made in 2002 but was then renegotiated. 

“The first delivery [of 10 aircraft] only took place in 2013. Unfortunately there were cost escalations in the contract and this obviously increased the basis cost to such extent that by the time we took delivery of some of these aircraft the actual contract price exceeded the market price and market value. Hence at each delivery we had to recognise an impairment of about $10 million dollars [about R135 million] an aircraft.” 

Meyer said the contract was now being renegotiated with Airbus to waive the impairment. 

He added that SAA, like other airlines, was facing a tough operational environment. He said the new immigration regulations had also had a “severe impact on our [SAA’s] revenue”. 

According to Meyer, SAA wasn’t in a good position to benefit from the drop in the oil price because the rand had also weakened. 

But when it was time for MPs to ask questions, there was a flood of questions over the instability at SAA. 

Democratic Alliance MP David Maynier immediately asked about the controversy surrounding the departure of Nico Bezuidenhout, the former acting chief executive, at the end of June. 

According to the Business Day newspaper, Bezuidenhout explained in an email that he was en route to Paris to sign a deal with Emirates, but Myeni prevented him from signing the agreement hours before the meeting. 

Bezuidenhout said in the email that Myeni said Zuma was unhappy with the agreement. 

Maynier asked: “Did you receive a call from President Jacob Zuma or indeed any other representative of the shareholder [government] to terminate the deal with Emirates?” 

Myeni replied that they had to make sure that all procurement procedures were followed during the process of making a deal. 

Various ANC MPs expressed anger by the question, and asked if this was a “commission of inquiry”. 

Carrim said Maynier was entitled to an answer, but that Myeni had the right to choose to answer the question during the next meeting with the committee. 

Myeni then said: “I think on the issue of Emirates deal I think because of sensitivities of the [memorandum of understanding] and content thereof I am going to [suggest that], with the permission of the honourable chairperson, we can prepare for the committee for the next round to give maybe more detail and what it is that was intended. 

“The board and management were aligned in terms of [how] we thought we could benefit but we wanted it to be in favour of SAA. At the same time we wanted to tick all of the compliances boxes.”

The meeting was adjourned without the question being answered.  

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Read more on:    saa  |  dudu myeni  |  parliament

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