The 7 biggest problems facing SAA right now – according to its CEO

South African Airways CEO, Vuyani Jarana, briefed the Portfolio Committee on Public Enterprises on Tuesday (27 November) – detailing his progress in implementing the airline’s turnaround strategy.

Jarana said that in the 2017/18 financial year SAA incurred more losses than budgeted due to its inability to execute its strategy.

In addition, he outlined seven of the key issues currently facing the embattled national carrier and how it was hampering his turnaround plan.

These include:

  • A weak balance sheet and negative equity;
  • Liquidity challenges;
  • Negative publicity about SAA;
  • Previous board dynamics which are not helpful;
  • Suppliers have lost confidence in SAA;
  • Forensic reports pointing to rampant corruption;
  • Banks closing credit lines to the national carrier.

SAA informed the committee that it has revised its strategy and turnaround plan to build a commercially focused airline with customer experience as its cornerstone.

The approved 2019/2023 corporate plan forecasts to break even by the 2021 financial year, it said.

The airline will incur financial losses of R5.2 billion and R1.9 billion for the financial years 2018/19 and 2019/20, respectively and thereafter SAA expects to be profitable for the remainder of the five-year period.

During the Medium Term Budget Policy Statement, the airline received an additional R5 billion special appropriation to help the airline pay off its debt.

On the government guarantees that the airline requires, the committee questioned if the guarantees required will be able to keep SAA liquid.

Public Enterprises Minister, Pravin Gordhan, said banks want government guarantees but also want to know the plans that are in place to be able to turn the national carrier around.

Read: The problem with turning SAA around: CFO

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The 7 biggest problems facing SAA right now – according to its CEO