SAA gradually on the mend: acting CEO
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Johannesburg - Troubled South African Airways is not out of the woods yet despite slight improvements yielded by the 90-day action plan to address its financial woes.
This is according to SAA’s acting chief executive Nico Bezuidenhout, who insisted this week the company was starting to see positive results from cost-saving initiatives at SAA from last year. Bezuidenhout was appointed as acting CEO in December during the suspension of former CEO Monwabisi Kalawe, who left this year after a tumultuous tenure at the airline which included turmoil in the board and clashes with board chairwoman Dudu Myeni.
SAA was last year transferred from the Department of Public Enterprises to the Treasury. According to Bezuidenhout, some of the measures to save costs included the cancellation of unprofitable routes, which contributed to cutting the airline’s cost base by about 17 percent.
Supply chain contracts with suppliers were also re-negotiated, contributing to about R1.25 billion savings made since the intervention started taking root.
He added, however, that retrenchments at the airline were not part of the plan, though they had offered voluntary retirement packages to some employees.
“It would be a mistake to say that we have fully turned the corner, but it is true though that our operating results for April and May were 40 percent better than the year before and our net results were 16 percent better than the year before.
“In tough conditions we are making progress, but the truth of the matter is that the next crisis in aviation is around the corner, which is the declining demand.
“If the demand starts going then it doesn’t matter what your pricing is if there is no demand,” said Bezuidenhout.
Some of the cancelled routes included direct flights to Beijing and Mumbai, which the airline is now serving through co-share agreement with the likes of Jet Airways, Emirates and Etihad airlines.
“Some of these markets have potential in the long-term, Beijing for instance looks like it will be quite good in the next three to five years,” he said. The airline is also eyeing the Africa market as a potential money spinner in the future as the continent’s population figures continue to grow.
“Africa accounts for less than 3 percent of global aviation at this point, and that presents massive potential for growth.
“If you ask Boeing or Airbus about their outlook into where they are going to sell aircraft in the next 20 years, they will tell you that apart from China, Asia and the Middle East, Africa is the next destination for growth.
“It logically flows that as an African carrier we will be looking at exploiting that growth and facilitating it,” he said.
He added that reducing staffing levels was one of the tough options to be considered, and SAA was approaching this difficult aspect very sensitively.
“From a humanity standpoint, labour is not the first thing you want to cut in the process.
“But for the last year we have put a freeze on recruitment and we are engaging labour in terms of reducing our head count through measures like early retirement, voluntary retrenchment and not filling vacancies.
“Just by doing that we can make significant savings, but at least that way you are not going to contact somebody and say ‘from tomorrow you don’t have a job’. It is on a voluntary basis,” he added.
According to Bezuidenhout, they were expecting to have reduced staffing levels by 10 percent by September this year through these measures.
“We hope that we can get at least a 10 percent reduction on head count in that way – and we are already halfway there through that process and consultation with labour.
“But at this point we are not even discussing forced retrenchments,” he said, adding the politics of the airline, which ultimately resulted in Kalawe’s departure, have hardly affected his short tenure as acting chief executive.
“Taking a little bit of a head in the sand approach on some of the matters was easy enough to do. The matter of the previous CEO and the board and the other issues there had absolutely nothing to do with me, and I did not have to concern myself much with those.
“That’s a process that took its own direction. I’ve always approached this role as an acting CEO, which is why I do not even sit in the CEO’s office.
“My expectation coming into the job is not about me getting the CEO job, it’s about focusing on the job at hand.” He admitted, however, that driving a turnaround strategy in an acting capacity does, in some ways, constrain him.
“It does in some respects and in some cases there would be things that I would have been more aggressive about, or driving in a slightly different fashion.
“But I have been involved with SAA for so long I do not need a title for me to tell people in some areas to do what they have to do”.
The Sunday Independent