3rd Jun 2019 | Elizabeth Sasu
SAA CEO Vuyani Jarana has resigned, and is prepared to work a three-month notice period until August 31, 2019.
According to his resignation letter to SAA board chairperson JB Magwaza, the CEO unpacked how uncertainty about funding and slow decision making processes were delaying the airline’s turnaround strategy. “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,” he said.
Jarana was appointed CEO in November 2017 and had the challenging task of bringing back the airline to financial health. At the time of his appointment, SAA had R9.2bn in debt that was maturing on November 28, 2017. The airline also had a turnaround plan, which had not yet been implemented, Jarana said in his resignation letter.
Under Jarana’s watch, a revised corporate plan was developed and approved by National Treasury in March 2018. This plan required funding of R21.7bn and would see SAA break even by 2021.
But since 2018 there have been three incidents in which the company was unable to pay salaries due to a lack of funding, Jarana said.
“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,” Jarana said.
“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 also raised “the speed of decision making” as a concern. “It is impossible to succeed in the turnaround with the current level of bureaucracy we have to go through to implement strategy.”
SAA must get approval from the Department of Public Enterprises (DPE) and Treasury to implement key decisions. Jarana said that doing so was not a problem, however it takes away “agility” for an entity like SAA which is in financial distress.
“Ways of working between the executive, the board and minister (without apportioning blame) have made it difficult to operate with required speed and agility.
“Lines of accountability are becoming increasingly blurred about what operational decisions are in my domain, which are in the board’s domain and which are in the minister’s domain. Trust levels are very low impacting ways of working,” he said.
According to Jarana the majority (60%) of problems at the airline are internal- within the control of management, staff, the board and the shareholder which is government. Market challenges only account for 40% of its challenges.
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