South Africans are still reeling in shock about the sudden axing of our Minister of Finance Nhlanhla Nene earlier this week. In the midst of this action appears to be SAA, its chairman Dudu Myeni being a close friend of President Zuma, and not accepting being dictated to by Nene. Not a day has gone by in the past month without SAA being in the news, none of it being positive!

When one reads that Myeni has so much power that she can command the President to fire his Minister of Finance, one should be very worried. In the Sunday Times today Nene is quoted as saying that he put pressure on SAA in the interest of our country.

I no longer feel safe flying SAA (I did surprisingly enjoy the flights between Johannesburg and Munich earlier this year), for the following reasons:

#   SAA has appointed seven CEOs (many Acting) in four years, not currently having a permanent CEO in place.

#   The Chief Financial Officer Wolf Meyer and Chief Strategy officer Barry Parsons have left the airline recently

#   The SAA Board only has three interim Board members.

#   The airline has traded/is trading under insolvent conditions

#   SAA sold off its Cape Town – London slot at Heathrow, losing a most valuable asset in return for cash, and impacting the tourism business of the Western Cape.

#   Former Minister Nene forbade SAA’s Airbus ‘swap transaction‘, the deadline of which is 21 December, and which has been renegotiated a number of times. Originally 20 A320 Airbus aircraft were leased, but this was swapped to 10 Airbus aircraft earlier this year, of which five have already been delivered. The swap arrangement was financially beneficial to our country, until Myeni wanted to renegotiate the Airbus lease agreement once again. Payments from SAA to Airbus are expected by 21 December. This is the deal that was refused permission by former Minister Nene.

#   The SAA Pilots Association has expressed its ‘lack of confidence in the SAA Board‘ twice within one month. The Association has demanded that SAA has a Board ‘fit for purpose‘.

#   SAA Pilots Association Chairman John Harty and a number of pilots have been accused of ‘attempted to recruit SAA technicians to tamper with the rudder system of an aircraft in order to sabotage it and thereby discredit the black pilot who’d be flying it’. The matter is being investigated by the Hawks. In a statement, Harty said that ‘Neither I or my association will be intimidated and forced to back down in our efforts to ensure that the SAA Board is replaced by people with aviation management expertise and that a CEO with appropriate skills and experience is appointed‘.  This is the most disconcerting part of the SAA debacle, in my opinion.

#   The SAA Pilots Association is looking at ‘different options aimed at restoring proper governance at the airline, including applying for business rescue and industrial action‘.

#   SAA went to court to obtain an interdict preventing media houses from publishing legal opinion about the airline’s ‘precarious financial situation‘ and the legal risks of a potential dispute with Airbus re the purchase and swapping of Airbus aircraft. Business Day had already published the opinion of Ursula Fikelepi, the airline’s General Manager for Risk and Compliance.

#   SAA Head of Procurement Dr Masimba Dahwa was placed on special leave following a forensic report by Ernst & Young, which found 28 of 48 largest SAA, Air Chefs, Mango, and SAA Technical contracts to have been ‘improperly negotiated, poorly contracted or weakly managed’.

#   Allegations of closures of certain SAA routes by SAA executives, ‘which it is implied was done for reasons of commercial sabotage‘. Former SAA Acting CEO Nico Bezuidenhout is said to have closed the SAA route between Cape Town and Durban, to benefit Mango. The closure of the Johannesburg – Senegal – Washington route in favour of a stop-over in Ghana may have had motives other than financial ones.

#  The trade union UASA is placing pressure on SAA too: ‘We fully expect him (the Minister of Finance) to explain to us the future of our members at SAA and we fully expect him to urgently intervene in the SAA crisis, without which we may see the national carrier plummet due to the absence of governance, leadership and instability’. (Our emphasis).

Given all the problems at SAA, and the airline being at the core of the axing of Nene, leading to a radical Rand exchange rate tumble, boycotting SAA, Mango and SA Express flights would be one way for South Africans to express their dissatisfaction with the events of the past week!

Sources: Sunday Times, Business Day, BizCommunity.com, Business Day, Politicsweb, Tourism Update, Moneyweb

POSTSCRIPT 14/12: It was announced late last night that President Zuma has redeployed new Minister of Finance David van Rooyen, and has appointed former Minister of Finance Pravin Gordhan as new Minister of Finance!

POSTSCRIPT 17/12: SAA was unsuccessful in obtaining the interdict against the media houses!

Chris von Ulmenstein, WhaleTales Blog: www.whalecottage.com/blog  Tel 082 55 11 323 Twitter:@WhaleCottage  Facebook:  click here