How to turn SAA around – again
Newly appointed South African Airways chief executive Musa Zwane is upbeat about resolving financial issues at the national airline, but is still pleading with the government – its shareholder – to bail the airline out once more.
Zwane told the Mail & Guardian’s Qaanitah Hunter this is one of the most effective ways to ensure the turnaround strategy SAA is implementing yields positive results.
You are the seventh person in this position in four years … are you nervous?
I am not nervous … I need to roll up my sleeves and look at the problems and try and make a contribution. I start from that premise. You are right to say we have had seven people here in a period of four years.
I was just speaking to the pilots a minute ago and they said this office is cold.
And one of them was saying it is because of the revolving door – when it revolves the cold air from outside makes it permanently cold. It just gives you an indication of what is happening here.
Where do you start?
I think what is important here is stabilising the organisation. If in four years you got seven people on the top, and you have all of these issues going on around you, it becomes a problem because you have confused employees in an organisation. They don’t know what is going to happen tomorrow. Is the airline going down? Have we been abandoned by the shareholder? I think the important thing which is really the first port of call is to look inside, stabilise the gaps and give people hope.
There are senior vacancies at SAA. Is this of concern to you?
The second priority is to make sure all those vacant positions are filled. I know we have a vacant chief finance officer position and we have a vacant chief strategy position – in a very short space of time we need to get people to act there and get some movement. Without those key positions filled, it is going to be an issue.
There is also the tense relationship between SAA’s management and board. How will you deal with this?
We ought to do something about that: it is very important we have this understanding. At the end of the day, they are accountable for this organisation. If there’s a wedge between the executive and the board, there’s a problem that needs to be sorted out.
The most pressing issue to many is the controversial R6-billion Airbus deal. Where do you stand on this?
It is important to get this deal so many people are speaking about sorted out. We are waiting for shareholders to pronounce on it. There was an application forwarded to the shareholders and I think there is a meeting of the technical team. Once the technical team has met, they will come back to us with an answer and we will then take it forward.
You told Parliament in five years SAA will be profitable. How will you make this happen?
I think we have a long-term turnaround strategy. It was approved by a board in 2013. It was taken by our shareholders to Cabinet. We are working on that long-term turnaround strategy. One of the assumptions of that strategy was, in order for us to move into profitability, we needed some sort of capital injection from our shareholders.
We were told it would not be possible for the national treasury to give us any money. They can give us guarantees, but it is not possible for us to get something in the form of equity injection. Our plan was based on this; and then we found out we cannot get the capital or equity injection we need.
So SAA won’t be profitable soon?
In Parliament, I said we need to be realistic. We said we will be profitable in year three [of the turnaround strategy plan 2016]. I can’t say by next year the organisation will be profitable. The original assumption of a capital injection is not there.
SAA is making a loss. How do you plan to deal with this?
We have a cost compression drive. And we have indicated, since the drive started, we have lowered our cost permanently by at least R3.5-billion. For the past nine months, we have been able to trim down costs by R165-million. When you look at it on the cost side, we have come down.
The problem we’ve experienced at the moment is more on the revenue side. When you look at what we budgeted and where we are at the moment, I think we are down on our budget on the revenue side by 10%. The costs are well controlled. We are not getting the customers we needed to make the revenues we budgeted for last year.
What are some of the ways used to cut costs?
We have embarked on a staff reduction involving 465 positions. We will achieve this in two ways: by freezing vacancies and by offering voluntary retrenchment packages.
SAA staff members are tense and worried. Pilots are angry. How are you going to sort this out?
We need to ensure that as executives in this company we engage with our people. If we don’t do that they will pick a fight with the board instead of telling management what is going on. When you feel ignored by the people who are supposed to support you, you go to the next level. I think this is what has happened here. I am getting to the employees and saying let’s have a conversation.