Jarana’s resignation a sign SAA is almost irredeemable - OUTA

The Organisation Undoing Tax Abuse has responded to South African Airways group CEO Vuyani Jarana’s resignation, saying it is a sign that the national carrier cannot be saved as long as it is wholly state-owned.

SAA confirmed Jarana’s resignation on Sunday evening, adding that his four-page resignation letter had been accepted by SAA chair JB Magwaza. Jarana cited a lack of certainty around the funding for his turnaround strategy as a stumbling block in efforts to turn the carrier around.

In a statement released on Monday, Outa executive director Heinrich Volmink said South Africans had watched for 11 years as government continued to fund SAA to the tune of R50bn to keep it afloat.

'Unfixable mess'

The statement called Jarana’s resignation "a symptom of an unfixable mess that will require a completely new approach to address this expensive and inefficient state-owned entity". 

"We simply can’t afford to keep SAA as a wholly government-owned entity," said Volmink.

Volmink said while there were sparse examples of state-owned entities that were better off for being wholly state-owned, there were more examples of companies that thrived after partially privatising.

"Just as we did with Telkom, the time has arrived to allow an external partner with experience in efficient airline management to take a stake in the airline, if it is going to survive," Volmink said.

The Outa statement said if South Africa were to recover economically, it could not afford to lose more money on failing state-owned entities.

Recently Eskom CEO Phakamani Hadebe and Transnet acting group CEO Tau Morwe also handed in their resignations.

But it is Jarana’s resignation that sets a particularly precarious tone for Minister of Public Enterprises Pravin Gordhan’s new term, as Jarana’s reasons for quitting included restrictive relations with the shareholder representative.

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