Gordhan makes no bones about SAA

8 September 2016

Cape Town - Finance Minister Pravin Gordhan made no bones about South African Airways (SAA) during an interview at the Open Book Festival in Cape Town on Thursday.

To this Gordhan replied that some kind of continuity had to be created.

"These things take a long process of consultation and the composition of the board reflects that process," said Gordhan.

In his view, deputy chair Tryphosa Ramano, for instance, is very skilled.

"There is now a much stronger balance on the board and the chair [Dudu Myeni] will have to work with that team. Any notion that the chair can carry on doing things with the new board that might have been done in the past must be seen in the context of the board's memorandum of understanding and the script that has to be followed as well as government rules," said Gordhan.

Malala wanted to know if Treasury is going to give SAA the R5bn "bailout" it wants and needs.

Gordhan replied that firstly, the new board must get working and then proper sub-committees must be ensured. The next step would be to get the airline's financial statements out on September 15, after which the Hong Kong authorities should be satisfied, enabling SAA to keep that route going.

This must be followed by starting the process of "hiring a competent, experienced CEO" and also getting a chief financial officer, as the current incumbents are just in acting positions.

"The bottom line is that we must put a management team in place with skills to run an airline. Because of our geographic location, not all routes are profitable. I am learning about airline strategy matters where one could, for instance, be willing to make a strategic loss and how to compensate for it - like in any other business," said Gordhan.

"I wish you luck," Malala told Gordhan.

"Thanks, I will need it," was the reply.

This article first appeared on Fin24, see here.