Streamlined SAA 2.0 no longer a shadow of its former self

Connie Queline

Streamlined SAA 2.0 no longer a shadow of its former self

You can also listen to this podcast on iono.fm here.

ADVERTISEMENT
CONTINUE READING BELOW

JEREMY MAGGS: You would’ve seen last week the Auditor-General painting a distressing picture of poor governance on the part of the executive authority, accounting officers and the board of South African Airways (SAA), along with procurement processes and audit instruments that it says have allowed graft and corruption to flourish at SAA.

Joining me now is the interim chief executive officer of the airline Professor John Lamola, a very warm welcome to you. Thank you for joining me. Does your airline accept the criticism that has been put forward by the Auditor-General?

JOHN LAMOLA: Good day, Jeremy, and the listeners. Jeremy, what the Auditor-General is commenting on is the audited financial statements of SAA for the period from April 2018 to March 2022. This is the SAA that all South Africa heard of during the Zondo Commission, South African Airways that went into business rescue because of a number of challenges that it had. Yes, to a large degree yes, this talks about that SAA, it’s not talking about the current South African Airways.

JEREMY MAGGS: Do you believe that financial haemorrhaging has stopped now?

JOHN LAMOLA: I can assure you that South African Airways since its reemergence from business rescue, from May 2021 to current, has been on a remedial programme to sort out all those audit findings that the 2018 financials are about.

Listen: SAA: permanent leadership needed to fix airline

JEREMY MAGGS: And what, professor, does that remedial programme entail?

JOHN LAMOLA: That is prescribed as part of what is normally called the audit health plan. In the first place, fundamentally, we’re talking about version two South African Airways, as it started its operations in September 2021, where fundamentally, (all) the policies of SAA were reviewed with a specific focus of ensuring that the mistakes of the past are not repeated.

There’s a new management, the new board and with the minister as executive authority, very, very (strong) in ensuring that everything is done the new way in SAA.

It includes interventions from improving record keeping to stabilising financial reporting systems and so on.

JEREMY MAGGS: What further, professor, aggressive cost cutting measures are either being considered or implemented right now?

JOHN LAMOLA: Cost cutting, SAA has a fundamental cost structure. The number of staff SAA had before it went into business rescue was 5,000 employees, we are down to 1,000 employees. It’s not good to talk about cost-cutting and job-cutting in the current South African unemployment situation. That’s one. But we had to, because there was a kind of bloated staff, there are savings that we have implemented in our IT spend and a number of unnecessary leakages that were happening, for instance, with the staff rebate ticket system, where previously there was like an airline run within an airline, where very generous incentives or benefits were given to staff to fly all over with their relatives and friends.

Secondly, also, the revision of the evergreen agreement that SAA had with the pilots, South African Airways pilots were some of the best paid in the world, with unbelievable benefits. All of that has been done away with.

ADVERTISEMENT
CONTINUE READING BELOW

We have a contingent of employees who are really doing their best within the economic capabilities of the airline.

JEREMY MAGGS: Professor Lamola, the potential equity partnership that has been in the mix for a long time now, remains in limbo. Why is that?

JOHN LAMOLA: Commercial transactions of this magnitude normally are open to all sorts of vagaries, but specifically with this one is the whole political context of the fact that this transaction is being managed by the shareholder in consultation with all the other government processes that are working with. For us as South African Airways management, we have from the beginning understood our mandate as being focused on ensuring the operational efficiencies of SAA and ensuring that South African Airways doesn’t revert back to depending on the fiscus for its operations.

Listen: Holomisa: Gordhan is being economical with the truth on SAA sale

As part of the board, there have been alternative plans that have been put in place, risk management where SAA is foolproof, that even though this Takatso consortium is delayed or anything happens to it, South African Airways will continue. We have just submitted a three-year corporate plan as required by the PFMA (Public Finance Management Act) that shows that in the coming three to five years, South African Airways will still be flying, and we’re entering into long-term lease agreements with lessors to get more aircraft and so on.

JEREMY MAGGS: But, Professor Lamola, you cannot be satisfied with the way in which the shareholder is handling the sale, particularly instances like holding meetings in camera before the parliamentary committee.

JOHN LAMOLA: That is not part of my remit as the interim CEO of South African Airways to pass judgment on how the shareholder, as the shareholder, decides to dispose of his stake in the company that I am operationally responsible for.

JEREMY MAGGS: Professor John Lamola, thank you very much indeed.

Read:
Mango sale to forge ahead despite Gordhan’s efforts
Packing for Perth? SAA to resume flights down under
Gordhan to be subpoenaed over SAA-Takatso transaction

SOURCE

Leave a Comment