SAA turnaround plan takes off
The Department of Public Enterprises has unveiled a 12-year recovery plan for the national carrier.
JOHANNESBURG - Public Enterprise Minister Malusi Gigaba on Tuesday revealed the details of his 12-year Long-Term Turnaround Strategy (LTTS) for the troubled South African Airways (SAA).
He says the LTTS is focused on consolidating the airline's routes and updating its fleet while bringing the national carrier back to a point where it can "leverage off its balance sheet" rather than relying on lenders.
The airline reported a loss of R1.25 billion last year and was hit by strike action in recent weeks.
Gigaba says the plan has been inspired by the practices of successful leading airlines from around the world.
Part of the strategy will be to lower costs while increasing turnover.
Gigaba says SAA will "sweat its assets" in terms of both staff and structures.
The main focus of the plan will be on the more profitable routes within South Africa and the rest of the continent.
But certain newer overseas routes will also take precedent, particularly in terms of diplomatic and economic relationships with other states within Brics (the Brazil, Russia, India, China and South Africa group of emerging economies).
Gigaba spoke strongly about the need to succeed with the LTTS, saying, "There is no luxury to fail in the implementation of this strategy."
"It is plausible; it can be done," he said, adding, "Failure is not an option."
SHADOW MINISTER SCEPTICAL
The Democratic Alliance (DA) quickly responded to Tuesday's announcement, concerned that failure would indeed be an option, perhaps inevitable.
DA shadow minister of public enterprises Natasha Michael says the LTTS is SAA's ninth turnaround plan in 13 years.
She says the plan "does not instill confidence that the public carrier will be stabilised. It appears that SAA will continue flying around in circles with no end in sight.
"Nine turnaround strategies and R16 billion later the airline continues to yield lower profits than its global competitors."
Michael says vital issues like costs, job losses, cutting and introducing routes and whether SA Express, SAA and Mango Airlines would be merging were not adequately addressed.
"I will be submitting parliamentary questions to gain clarity on these matters."
The opposition party, whose economic policies are largely neo-liberal and anti-nationalistic, says the airline should no longer be owned by government.
"SAA must be privatised in order to ease the burden on the public purse. South Africa has far more critical service delivery concerns than pouring cash into sustaining a growing concern."
Two weeks of industrial action led by the South African Transport and Allied Workers Union (Satawu) ended this week without agreement.
Unions were demanding a 12 percent wage hike.
In April, the airline selected former Airports Company South Africa (ACSA) head Monwabisi Kalawe as its latest CEO.
During the months prior to the appointment, the embattled national carrier faced turmoil following the resignation of former chairperson Cheryl Carolus and then CEO Siza Mzimela.
In October 2012, Vuyisile Kona was appointed as acting chairperson.
He soon faced a precautionary suspension after a breakdown in the relationship with the SAA board.
Kona was suspended for allegedly going over the heads of his superiors and complaining about the board to President Jacob Zuma.
He also allegedly negotiated long-term fuel deals, which was beyond his capacity as acting chairman, and the board was suspicious of his relationship with the National Transport Movement (NTM).
That union was responsible for a crippling strike at the airline in January.
In hopes of bringing stability to SAA's board, Kona was dismissed in March 2013.
He was replaced by Nico Bezuidenhout, the head of SAA's low-cost airline Mango.