Stop gap: Martin Kingston of Business for South Africa, backs the effective but safe use of retirement funds and savings. (Paul Botes/M&G)
NEWS ANALYSIS
It’s a case of another week, another crisis for one of the country’s state-owned misfits, SAA. On Wednesday, the airline announced that it had suspended its second executive in the space of a month. This came amid growing threats of widespread industrial action that could ground flights and other operations at the airline.
Yesterday morning, the ailing airline’s senior executives met with an outside crisis management team at Airways Park to craft a communication strategy around the latest crisis to hit this year.
The timing is bad for an airline in deep financial trouble. SAA is trying to convince the consortium of banks that holds its credit to roll over about R9.2-billion in loans that were due at the end of September, and it is still waiting for Finance Minister Tito Mboweni’s announcement regarding a bailout during the mid-term budget adjustment in less than three weeks’ time.
SAA’s last crisis was in June, when former chief executive Vuyani Jarana abruptly resigned, citing lack of support and meddling by the board and shareholder.
The fallout was so bad that he was forced to leave immediately — amid a board investigation into him allegedly leaking his resignation letter to media — even though it had been announced he would serve three months’ notice.
The airline’s financial results from March 2018 remain unpublished, but are rumoured to be in the region of R9-billion in losses. Just last week, Public Enterprises Minister Pravin Gordhan announced that SAA would not table its 2019 financials to Parliament on time — for the third year running.
But perhaps the most critical of SAA’s problems is the terrible fallout with labour that saw three unions — the South African Airways Pilots’ Association, the National Union of Metalworkers of South Africa (Numsa), and the South African Cabin Crew Association (Sacca) — threaten crippling industrial action.
This is also the one problem that SAA’s leadership should have seen coming — and promptly dealt with.
The signs were there.
The unions have been unhappy, and communicated this very clearly, from that day in June when Jarana announced his resignation, leaving SAA veteran and the general manager for operations Zuks Ramasia to step into the headwinds.
Her announcement as interim chief executive was met with picketing and small-scale industrial action from some of the unions, who lamented her apparent lack of skills.
The unions’ reaction to the announcement had less to do with Ramasia — whose performance at operations is underpinned by the fact that SAA consistently won awards for being the most on-time airline in the world even during the Dudu Myeni years — and her capability, and probably more to do with Jarana’s exit. That these awards were won despite the airline being beset by chronic underfunding, rampant corruption in the spares and maintenance division, and political instability is not something to be scoffed at.
Jarana had, after all, managed to do the one thing that all his predecessors had not: get all the unions — with all their divergent needs — to rally around his vision for a turnaround.
This was achieved through some crafty negotiation, bartering, and playing hardball.
Statements from the unions over the past eight days show that relationships were fractured once again post-Jarana, and that communication has once again evaporated. All three organisations cite management’s lack of action on their complaints as their main concern. The issues range from vacant positions not being filled (including those of the chief executive and chief financial officer) to a perceived failure to deal decisively with corruption.
The suspension this week of Vuyi Raseroka, SAA’s general manager of human resources — amid allegations of tender impropriety — has fed into a narrative held by unions that the board is attempting to rid the airline of Jarana’s legacy. After all, she was one of his hires.
Raseroka has referred all questions about her suspension to the airline.
Evidence of this conspiracy includes the fact that last month SAA suspended its customer experience head, Vuyo Tuku, another Jarana hire, while the airline has not renewed acting chief information officer Mankwe Makgate’s contract.
Some executives have been moved from their posts; others are said to be negotiating their exits.
Depending on who you speak to, reasons vary, from the team of “black belts” — as Jarana referred to them — being exposed as not up to scratch after the departure of their sensei, to the narrative of a purge being under way. There are also concerns about board members setting themselves and their associates up for a piece of the procurement pie.
SAA has been mum on the fraught relations with labour, as well as the recent spate of suspensions.
It is understood that the airline has appointed IT Strategy executive Cobus McQuirk to act as the Chief Information Officer, while Martin Kemp, who is the head at Air Chefs, has been appointed acting GM:HR.
Politically, Jarana proxies are said to be lobbying powerful ANC national executive committee (NEC) members — including deputy president David Mabuza and treasurer general Paul Mashatile. It has not been established if Jarana is part of the lobbying.
It now remains to be seen what trade union federation Cosatu’s reaction will be to the news that Mboweni has managed to convince his NEC counterparts — at least on principle — that SAA needs a private equity partner.
This action has also played into the belief by Numsa and Sacca that the SAA board is carrying a mandate that will ultimately see the airline privatised and sold off to their friends and associates. This, they argue, will lead to job losses on a mass scale.
Martin Kingston, the board member in charge of the long-term turnaround strategy that will stabilise SAA and ready it for an equity partner, is the unions’ main target (together with fellow board member Thandeka Mgoduso) because of his link to global financial advisory firm Rothschild — at which he is executive chairman. The board argues that Kingston is conflicted because Rothschild has also rendered services to SAA, including assisting with raising capital.
Their argument is that the board’s hands-on approach and the almost daily involvement by some of its members is, in fact, meddling to influence the awarding of contracts.
But those who are sympathetic to the board insist that its members’ behaviour is only because the airline is in such a precarious position, and any person who resists this wants the status quo of rampant looting to remain.
Each party insists it is acting in the best interests of the airline. But at this stage it does not matter who is right — if they do not find a way to manage this contestation they can all kiss SAA goodbye.