JOHANNESBURG, February 20 – South African Airways (SAA) chief executive Vuyo Jarana has welcomed government’s review framework for state-owned enterprise (SOEs) support as announced by Finance Minister Tito Mboweni on Wednesday.
Mboweni announced in his budget speech that government would increase its debt guarantee to SAA by R6.2 billion, with stringent measures, after giving it R5 billion in October. The debt-ridden airline has a R20 billion debt hole in its balance sheet.
“If a state-owned enterprise applies for a government guarantee for operational purposes, it will be required to appoint a chief reorganisation officer (CRO) in concurrence with the National Treasury and its bondholders,” Mboweni said.
“The CRO will undertake a full operational and financial review. When banks need state support, we appoint a curator. When provincial and municipal finances are in disarray, government can take over the running of the administration. These rules should also apply to all SOEs.”
Jarana said the measures announced by Mboweni for accountability at SOEs would bring a greater commercial focus, and profit and loss accountability at SAA.
“SAA has got three markets; domestic, regional and international. What we are doing is we are structuring the business units within SAA, no new companies but specifically bringing more accountability. Putting together teams that are going to be dedicated to drive our growth across the continent at the same time making sure that we continue to lead in the domestic market,” Jarana said.
“We also want to give greater accountability for profit and loss, and commercial delivery to the international markets. Seventy percent of the revenues of SAA are coming outside South Africa. That means the structure of governance the process of taking decisions must be more inclusive. That’s the change we are putting in place so that all of us are accountable.” (ANA)