Cabinet to ratify SAA’s new CEO in March

2013-02-17 10:00

Public enterprises minister says turnaround strategy will be the next chief’s top priority

Cabinet is expected to ratify the name of the new SAA board CEO next month, Public Enterprises Minister Malusi Gigaba has said, warning that this was not the silver bullet that would solve the carrier’s problems.

Acting CEO Vuyisile Kona was placed on “precautionary suspension” this week after less than four months in his job and an investigation into his conduct is currently under way.

He, however, refused to go, saying he didn’t know what he had done wrong and that leaving would set a bad example for the airliner’s 11?000 employees.

Gigaba has so far not given reasons for the suspension – or entertained Kona’s refusal to leave – only saying the suspension was “an intervention by the board to restore corporate governance”.

Though the minister and SAA have been reticent, they have implied Kona’s suspension was not a mere clash of personalities within the SAA board.

SAA spokesperson Tlali Tlali this week told Business Day newspaper that the allegations against Kona amounted to “contraventions of the Finance Management Act in relation to procurement of certain service providers”.

He added that the allegations would be investigated by an external and independent law firm.

Gigaba told City Press the outcome of an investigation into Kona’s conduct would be announced and followed by a disciplinary process.

He gave assurances that a new chief executive would be in place by the end of next month.

“We hope they can assume office immediately, but it’s not a train smash because we have an acting CEO (Mango chief Nico Bezuidenhout) and the board is intact,” he said.

Gigaba expressed confidence in Bezuidenhout’s competence and added that the governance problems have not been disrupting flights.

“It does not mean there is a crisis at SAA. The operations had not been impacted, but this is an intervention to restore corporate governance,” he said.

Gigaba said the governance issue was a “soft” one and that the more difficult task was the turnaround strategy for the airline.

That would be the new CEO’s first task. “SAA has financial problems and we know that, so it was nothing new when the current CEO was suspended.

“It’s an old problem and won’t be fixed immediately. I don’t think anybody must expect quick fixes. Merely appointing a new CEO won’t solve that,” he said.

“We have no appetite for continuous bailouts and financial injections. The airline was never properly capitalised from the outset,” he said.

He said the airline needed a new strategy to make it viable and competitive, and accomplish its mission and vision.

Gigaba said routes will be reviewed too.

“I have asked that the board give me a plan for all the new routes for the continent, and look at unprofitable international routes, and assess them and make decisions.”

He criticised the “long and cumbersome” decision-making process of the board, saying it should be streamlined.

SAA has asked for several bailouts from the government over the years, most recently receiving a R550 million bank “facility” to cover fuel and short-term commitments.

At its AGM in October, the airline reported a R1.25 billion loss for the year. Its loss over the past decade has been R14.7?billion. In early October, the Treasury gave SAA a R5 billion government guarantee to recapitalise.

SAA’s governance has been in shambles of late.

Kona replaced Siza Mzimela at the end of last year, while the resignation of most of its board, including chairperson Cheryl Carolus, rocked the board earlier in the year.

She cited a lack of support from SAA’s shareholder, the department of public enterprises.

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