South African Airways CEO resigns

The CEO of South Africa’s embattled airline, South African Airways has resigned after less than two years in the job.

In his resignation letter dated May 29 the outgoing CEO, Vuyani Jarana blamed the government for a lack of support in funding efforts to turn the airline around as it struggled with multi-million rand losses, falling passenger numbers, and executive scandal.

“Lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed,” he said.

“The strategy is being systematically undermined, and as the Group Chief Executive Officer, I can no longer be able to assure the board and the public that the LTTS (long-term turnaround strategy) is achievable.” 

The former telecoms executive had previously requested $1.5bn (R21bn) from South Africa’s Treasury to rescue the airline, which hasn’t turned a profit since 2012.

The government pumped 5bn rand in the 2018/2019 financial year, most of which was used to shore up creditors, Jarana said.

“We have not been able to obtain any further funding commitment from government, making it very difficult to focus on the execution of the strategy,” he added.

Bloated, inefficient, and subject to increasing government interference, the state-owned airline underwent an alarming and almost terminal decline under the government of President Jacob Zuma. 

Following his appointment in September 2018, Jarana and his team pursued a make-or-break turnaround strategy to boost passenger numbers, rationalise routes and coax vital financial support from the government.

His resignation follows closely in the footsteps of Phakamani Hadebe’s who tendered his resignation from South Africa’s stricken public utility firm Eskom last week, citing “unimaginable demands.”

The spate of resignations highlight Ramaphasosa’s uphill battle to salvage failing state-owned entities mired in mismanagement and corruption allegations.

On Sunday Jarana became the eighth CEO to resign from the company is six years, sparking rumours that the parastatal will be forced into administration.

In a recent interview South Africa’s finance minister Tito Mboweni told the FT he was tempted to pull the plug on the airline:

“If it was my personal money, I wouldn’t put one cent into South African Airways. I’m not allowed to talk about it,” he said.

“If I were running a chicken farm and I kept on putting in inputs but I wasn’t getting any eggs, I would close it down.”

In a statement the board of South African Airways said it had accepted Jarana’s resignation, and thanked him for his service. 

The SAA chairman Mr JB Magwaza said the airline would continue to try to reduce the airline’s cost-structure and make the airline competitive both domestically and globally.

On the issue of succession, Magwaza added that they “will immediately commence the process of searching for a new group CEO to take the strategy forward.”