Acting South African Airways (SAA) CEO Oyama Mabandla is considered the likely successor to André Viljoen, who resigned this week, widely believed to have done so under pressure.
Informed onlookers who described Mabandla as Viljoen’s “natural successor” included John Morrison, president of the Airline Association of Southern Africa. Morrison spoke as Mabandla’s acting status, effective from the beginning of September, was confirmed by the SAA board. In a brief statement, the board described the parting of the ways with Viljoen as “amicable”, while Viljoen paid tribute to the 11 000-strong staff of SAA for “their support and tireless efforts”. The board did not indicate when a permanent appointment might be made or how that process will unfold.
Viljoen’s resignation this week is widely attributed to the R7-billion hedging losses suffered by the airline in the past financial year. The losses, first reported by the Mail & Guardian, were uncovered by a Transnet Group Audit Services report, which, at the time, put them at R2-billion.
They flowed from 10-year contracts that effectively took a bet on the rand/dollar exchange rate reaching R10. Instead, the rand has strengthened significantly over the past two years.
The losses resulted in the airline becoming technically insolvent, with liabilities exceeding assets. This forced the government to provide credit guarantees to creditors and recapitalise the airline to the tune of R6,1-billion. The hedge book has since been farmed out to commercial banks.
The losses were thought to have already claimed their victim with the abrupt departure of chief financial officer Richard Forson. Forson’s departure was followed by a restructuring exercise that halved the number of executives reporting to Viljoen, and was capped by Mabandla’s appointment. The move was seen as bringing some stability to the airline, which had suffered an exodus of key executives.
This week Morrison said he had dealt with Mabandla (41) for much of the latter’s three years with the airline, first as head of the legal department and executive vice-president for strategy, revenue and network planning. Morrison had been impressed with Mabandla’s “competence across a range of areas”.
Morrison said he had no doubt that the purpose behind Mabandla’s appointment as deputy CEO in November last year was for him to succeed Viljoen. “If you look within SAA, there is no other person they can pick and our experience with foreigners has not been that pleasant,” he said, in a thinly veiled reference to the flamboyant American former CEO, Coleman Andrews.
Mabandla brings with him a strong legal, financial and technical background acquired in the United States, London and Switzerland. The SAA top job is the latest in a string of achievements inside and outside the airline.
He faces the challenge of maintaining SAA’s operational profitability and exploiting the global recovery from the post-September 11 2001 air-traffic volume slump.
Apart from the hedging losses, SAA recorded a R549-million profit last year, its first profit in years. In 2002 it recorded a R831-million loss. When SAA unveils its results in August, it is expected to have benefited from the strong rand.
Morrison said Asia and Australasia had shown the best recovery from the terror attacks “and that is where [SAA] should be”. Europe was also showing signs of recovery, as was Africa, which had not been as severely affected. North America was the only region still in the doldrums.
Mabandla spent 18 months in strategy, revenue and network planning, a division viewed as “the commercial heartbeat of the airline.” Before that, for just over a year, he had been executive vice-president and general counsel. Mabandla is credited with cutting the airline’s legal bill by 60% and negotiating the $3,5-billion acquisition of 41 Airbus aircraft. Prior to this, he was the operational head of the airline’s legal department and negotiated the June 2000 acquisition of 21 Boeing 737 800s.
His previous experience was as a merchant banker, working for two years as a corporate finance associate for Union Bank in Switzerland. While there, he participated in the unbundling of Billiton from Gencor, followed by its merger with Australia’s BHP and listing on the London Stock Exchange.
Mabandla’s early legal work includes research for renowned struggle lawyer George Bizos. His education took him from the University of California in San Diego, where he completed an undergraduate degree in political science, to Columbia University, New York, where he obtained a doctorate in law.
He is also politically well-connected, having spent the 1980s in exile, working, among others, with the late Chris Hani and Mzwandile Piliso, among others, as a political adviser to the African National Congress leadership.
Additional reporting by Cheri-Ann James