Former South African Airways CEO Loses Bet, Pays Up

Filed Under: South African Airways

South African Airways’ former CEO is now paying up after a bet he made three years ago.

The bet SAA’s former CEO lost

In 2018, former South African Airways CEO Vuyani Jarana made a bet about the future success of the airline. He bet 100,000 ZAR (~6,900 USD) of his own money that he could make the airline profitable within three years, with a stated deadline of March 31, 2021.

This bet was based on a challenge from Free Market Foundation Executive Director Leon Louw. If SAA did have a successful turnaround, Louw would make a donation to charity, while if it didn’t, Jarana would make a donation to charity.

Well, suffice to say that Jarana lost the bet, and it has nothing to do with coronavirus. On the most basic level, in June 2019 Jarana resigned from his role as CEO of the airline, because his turnaround plan wasn’t receiving sufficient government support and funding. As he stated in his resignation letter:

“Lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed.”

Perhaps it’s also worthwhile context to point out that the airline had gone through seven CEOs in five years, and he seemed to think he could do something that no one else could.

The carrier’s former CEO bet the airline could be transformed

SAA’s former CEO is now paying up

Jarana has indeed honored the bet he made, though he has called this a “technical knockout.” As he stated:

“Leon wins what I deem a technical knockout in boxing terms because everyone close to SAA at the time could see that the initiatives were showing green shoots of progress towards the turnaround of the company.

I still believe there is space for an airline of SAA’s profile in the African aviation market. Unfortunately, I could not see through my term hence Leon becomes a lucky winner.”

Meanwhile Louw has conceded that South African Airways’ lack of ability to turn a profit can’t be attributed to Jarana.

At this point South African Airways’ future is in limbo. The airline is bankrupt, having gotten rid of most of its planes and employees. Some days it seems like the airline might be brought back, while other days it doesn’t. Only time will tell what ends up happening.

At this point South African Airways is more or less out of business

Bottom line

South African Airways’ former CEO is honoring a bet he made three years ago, and is donating money to charity. He bet that the airline would be profitable within three years, but that didn’t end up happening. He even resigned from his role after a year, because he wasn’t receiving the support he needed for a real turnaround.

Jarana impressed me for the brief time he was in his role, but I guess some of his policies were too radical and logical to get government support.

Comments
  1. I’ve long believed that Vuyani was SAA’s best and final chance at restructuring the airline successfully. I’ve been dealing with SAA and the rotating door of CEOs for 15+ years now dating back to the mid-2000s. In that time, most of the CEOs were either incompetent, thieves, politically unacceptable, or just there to mark time in a caretaker role (or some combination of the above).

    Vuyani was different. He actually listened when others gave him advice. It made a world of difference. The unions backed him. The managers backed him. For the first time, SAA would come to partnership negotiations not with the “this is what we are going to do” attitude, but rather with a “what can we do together to be successful” approach. As I said in an interview with SABC in 2019 when I signed a codeshare agreement with SAA on behalf of my then airline, “for the first time in my memory, the different factions in SAA are actually working together towards a common goal rather than infighting”. As someone who was privy to some of his plans for SAA, they were realistic and achievable.

    Alas, the infighting was apparently happening at a higher level. Vuyani resigned the very day that Pravin Gordhan was reappointed as the Minister in charge of the Department of Public Enterprises. Read into that what you will. His exit sucked the life and morale out of an SAA team that was just beginning to believe again.

    I have stayed in contact with Vuyani since his exit from SAA, and he is a true gentleman in addition to being a very sharp business exec. He will be successful elsewhere, unlike the SAA he had to leave behind.

  2. @Sean M.
    I am from Europe and worked for the biggest online travel agency and now a GDS, I totally agree with his views. It is sad to see what was once a great airline going down the drain…same as Swissair 20 years ago (worked for them as well)

  3. That was a real sucker bet.
    SAA, the Post Office, Eskom and anything run by the government and the public sector unions will fail.

  4. Will I ever get my refund from SAA? My flight was canceled last March and so far they have ripped me off!! 900.00 stolen!! Wow.

  5. You are spot on Sean! Those were my words to! Vuyani was their last chance. The day he resigned I knew it was the end. SAA have never had a CEO of his calibre and acumen ehicj they need to bounce back. I’m a South African #avgeek with a love fot SAA, but Vuyani’s exit was the end. No amount of government funding can replace leadership like that. Good luck to them

  6. @Norm – sucker bet or otherwise, it was money well spent. Accepting the challenge of putting up even a token amount of his own money to bet on the team’s success motivated SAA from top to bottom to back him. Sometimes leadership is not just about having great ideas or skills – it’s about instilling confidence in the frontline who actually delivers the product. This bet, futile as it was by Vuyani’s own admission (his turnaround plan wasn’t expected to show results till 2022), lit a fire under them and made them want to do their best – something that was often sadly lacking before and since.

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