Should SAA be privatised?

2013-02-20 15:26
Turn SA Airways around in five years or privatise it, the Democratic Alliance said on Wednesday.

DA public enterprises spokesperson Natasha Michael said the latest turnaround strategy to be introduced by the national carrier should be its last.

"[It] represents the airline's last chance to stabilise its operations after nearly two decades of wasting public funds."

"If this fails, the only viable option left will be to privatise," said Michael.

Her call for privatisation came after SAA's acting chairperson Dudu Myeni told government officials on Tuesday that SAA had a 20-year turnaround plan for the airline.

Myeni said the plan possibly included cutting some flight routes.

Responding to questions about why the latest plan would be more credible than previous ones, SAA acting CEO Nico Bezuidenhout said the latest "holistic" strategy aimed to achieve "sustainable" business.

"We cannot continue to come back looking for further capitalisation. If nothing else, it's embarrassing," he said.

Bezuidenhout was referring to an incident where the national carrier reportedly received a R550 million bank "facility" to cover fuel and other short-term commitments last month.

Michael said the 20-year plan was too lengthy and said improvement should be seen in at least five years.

"Enough is enough. The airline's executives should not find refuge in the broad timescale of the latest addition to its plan archive," she said.

"It should not take 20 years to turn SAA around. While we acknowledge that miracles cannot be performed overnight, marked improvements should be visible in the medium term."

SAA has tried nine multi-billion rand turnaround strategies in the last 13 years, and recorded losses of R14.7 billion in the past decade.

Following comments around route cuts made in Parliament, Tlali Tlai, Executive head of Corporate Affairs said, "As part of the Long Term Turnaround Strategy, we are interrogating a number of areas that have an impact on the performance of the airline in executing its mandate and meeting its objectives.

"This will entail focusing on route and network planning. We need to be in a position to justify why we fly on certain routes. In answering this question, there must be a criteria or a formula we must rely on. When applied against certain routes or route data, based on information at our disposal, this must give an indication, independently so, as to whether it is advisable or not to fly on certain routes.

"In the event the formula is applied or tested against the routes or destinations we currently fly to, it could lead to SAA taking a decision to discontinue flying to certain destinations."

Besides its financial woes, SAA has also faced a managerial blow with top officials resigning or being suspended.

Bezuidenhout, who is the CEO of Mango, was appointed acting CEO of SAA earlier this month, after the previous CEO, Vuyisile Kona, was suspended.

Kona had replaced CEO Siza Mzimela in October 2012, after the airline reported a R1.25bn operating loss for the year.
Read more on:    saa  |  travel south africa  |  international  |  flights
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