Frustrated South African Airways CEO Resigns

Filed Under: South African Airways

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.

Bottom line

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…

Comments

  1. @Joe Chivas – not sure what you mean by that. I know Vuyani personally and there is very little negative that anyone has to say about him. Even SAA’s top management are in shock (although maybe not surprised) over the decision – all of the ones I’ve spoken to this morning have been left speechless.

    If Vuyani couldn’t make it work, nobody will be able to. That is simply the reality. He is the first SAA CEO who actually won the trust and backing of the majority of staff for his turnaround plan. Where that will go now, I don’t know.

    As Vuyani noted, 60% of the problems with SAA are the structures for interaction between the management, the board and the Government which don’t allow them to be agile and responsive to market forces. Although a newcomer to aviation, he was politically nimble and a superb organisational manager – that gave him the best chance of solving these structural issues. He also had a fierce personal determination to succeed in this role. If he is throwing in the towel, I really begin to doubt if the SAA issue can ever be truly resolved.

  2. No fleet renewal plans? We will need to relook this when the 6x A350’s start arriving and the A340s are gone.

  3. SAA could survive as a much smaller airline. They have no business trying to compete on any long haul route whatsoever. For example, once United starts EWR-CPT on a state-of-the-art 789, would anyone in their right mind fly SAA? They should keep a handful of old wide bodies for regional routes such as Lagos and Accra, and focus on being a small, nimble domestic and regional airline with a fraction of the cost base. The government is trying to protect jobs at a criminal cost to South African taxpayers.

  4. This is terrible. Very terrifying to watch how one of Africa’s finest and seasoned Airline is sacrificed by politicians.
    Very unfortunate. Can others learn the lesson? Especially, in the continent.

  5. Crazy stuff. I have recently been on the receiving end of the resultant aged fleet and poor service delivery. The headrest fell off in flight and hit me on the back of the head and when I got to my destination my luggage was crushed beyond repair. A sign of things to come?

    Although proudly South African, commercial sanity and safety considerations need to prevail. Does this mean a move to use another airline? Under the current circumstances this is a harsh and sad reality from SAA once having been a benchmark for service delivery in the airline industry.

  6. @Brett S I seriously doubt anyone except avgeeks books flights based off of aircraft type. I would rather fly an Airbus in economy than a 787

  7. SAA has been steadily declining over the past 15+ years.

    I’ve said it before and I’ll say it again: I avoid SAA at all costs, and I always pay a premium to fly Comair (dba British Airways) for flights intra-South Africa and inter-southern Africa. My travel agent in Cape Town has stopped even pricing out SAA flights, as she knows how much I can’t stand them, and every South African I know detests SAA more than I do.

    I wish them luck, but I am not hopeful in the least that they can ever be profitable.

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