Unfortunately this doesn’t come as much of a surprise, but South African Airways’ CEO, Vuyani Jarana, has just announced that he’s resigning as of August 31, 2019.
The current CEO has been at the airline since November 2017. Prior to that SAA had seven CEOs in five years, which should give you a good sense of just what a mess the airline is.
Why South African Airways’ CEO is resigning
South African Airways’ CEO is resigning because he says that uncertainty about funding and slow decision making processes have delayed his turnaround plan for the airline, and he can no longer sit by and let this happen:
“The strategy is being systemically undermined, and as the Group Chief Executive Officer, I can no longer be able to assure the board and the public that the LTTS (long term turnaround strategy) is achievable.
Whereas government injected R5bn of funding in the 2018/2019 financial year, a big chunk of that was used to fund creditors up to the end of March 2018.
We have not been able to obtain any further commitment from government making it very difficult to focus on the execution of the strategy.
I spend most of my time dealing with liquidity and solvency issues. Lack of commitment to fund SAA, is systematically undermining the implementation of the strategy making it increasingly difficult to succeed.”
Jarana seems well intentioned and like he genuinely means well for the airline. In June 2018, he even bet R100,000 of his own money that he could make the airline profitable within three years.
Why South African Airways is a mess
South African Airways has an inefficient fleet with no renewal plans, an inefficient route network, a huge amount of debt, and a lack of commitment from the government, which is preventing them from moving forward.
Not only can the airline not get the necessary funding to make improvements, but they can’t even cover their obligations.
For context, in 2017 South Africa’s deputy finance spokesperson said about the airline that “essentially they are insolvent and should have filed for liquidation.”
While SAA was going to shrink their way into profitability by cutting money-losing routes, unfortunately not much has actually happened, and the airline continues to lose a significant amount of money.
The revolving door of CEOs at South African Airways continues. In many ways this is the same as the story we just saw a few days ago at Kenya Airways, where the CEO resigned as well.
It’s sad, but I don’t think anything will change at South African Airways (or Kenya Airways, or Garuda Indonesia, or Malaysia Airlines, or Alitalia, or…) until the governments get serious about a turnaround plan. It’s either that or liquidation…