Gordhan warns SAA Board that it will not be ‘business as usual’

African News Agency (ANA)

Gordhan warns SAA Board that it will not be ‘business as usual’
Finance minister plugs some gaps, but South African economy is still precarious REUTERS/Siphiwe Sibeko/File Photo

Finance Minister Pravin Gordhan met with the newly appointed Board of South African Airways (SAA) on Friday and warned that it was not business as usual, his office said.

“The purpose of the meeting was to share with the board the status of the airline and government’s expectations of the Board. At the meeting, Minister Gordhan stressed that it will not be “business as usual” for the airline which is currently going through serious challenges including governance and financial difficulties, among other things,” the finance department said in a statement.

“National Treasury outlined the mandate of the board. The primary focus is to return the airline to financial sustainability whilst also delivering on other important government objectives. In line with the protocol on corporate governance which applies to all public sector institutions the roles and responsibilities and the separation of powers between non-executive directors and executives were outlined.”

The SAA Bard was approved by Cabinet on August 31.

The department said Gordhan underlined the importance of complying with the procurement framework and announced to the Board that SAA’s application for a going concern guarantee has been approved with 11 conditions.

The conditions include that the primary focus of the Board must be to return the airline to financial sustainability; SAA’s strategy must be strengthened and alignment with other state owned airlines ensured; SAA must implement more aggressive cost-cutting initiatives as in areas of fuel; aircraft ownership; labour; maintenance, repair and overhaul and procurement; the department said.

Other conditions include that the network and fleet plan must be refined based on a sound business case so that the airline takes advantage of opportunities to scale back the operations of the airline to focus only on operating routes which positively contribute to the profitability of the airline.

“The airline’s strategy must better differentiate the airline, enabling it to continue to compete effectively, inter alia through addressing the customer value proposition; the airline must work with National Treasury and the Department of Public Enterprises (DPE) in giving consideration to the possible merger of SAA with South African Express (SAX) airlines and the potential introduction of a strategic equity partner,” the statement read.

“The Board is required to start a new process of appointing the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and other key executives in consultation with the Minister; funding must be secured to meet the airline’s liquidity requirements; the Board is required to ensure that the AFS for both 2014/15 and 2015/16 are finalised; SAA is required to report progress on a regular basis to National Treasury; and a communication protocol was outlined for communicating progress as developments arise.”

On September 2, Cabinet announced the re-appointment of contentious SAA chairwoman Dudu Myeni to the post. Former SAA chief financial officer Tryphosa Ramano will serve as deputy chairwoman.

The rest of the 12-person board are Bajabulile Tshabalala, Thandeka Mgoduso, economist Nazmeera Moola, Akhter Hoosen Moosa, Gugu Sepamla, Siphile Buthelezi, former African National Congress MP Peter Maluleka, former print media director Mzimkulu Malunga, Martha Mbatha and attorney Peter Tshisevhe.

[The] board was finally named six months after Gordhan said, hours before he delivered the national budget in February, that he would move to appoint a new one to resolve the financial woes of the troubled national carrier.

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SOURCEAfrican News Agency (ANA)