South African Airlines CEO Vuyani Jarana has resigned, claiming that the long-term plan to make the airline profitable has been undermined.
The CEO of a loss-making airline says the plans to make the business profitable were being undermined and has resigned in protest.
In a resignation letter dated May 29, seen by Reuters, Vuyani Jarana told the chairman of the airline’s board that there was a lack of progress on implementing the group’s strategy.
“The strategy is being systematically undermined, and as the Group CEO, I can no longer be able to assure the board and the public that the LTTS (long-term turnaround strategy) is achievable,” Jarana said in his resignation letter.
South African President Cyril Ramaphosa’s major challenge is to reform loss-making state-owned entities, which are seen as one of the biggest hurdles to overcome to restore the country to economic growth. State-owned entities are dependent on government bailouts.
Jarana, a former executive at telecoms company Vodacom, was appointed in late 2017 to implement a strategy to return the airline to profit and wean it off government bailouts.
SAA, which has not made a profit since 2011, has drawn up a five-year turnaround plan that includes slashing costs and cancelling unprofitable routes as it grapples with cost increases that far outstrip revenue growth.
Jarana said that in March 2018, the Treasury approved the airline’s turnaround plan, which required funding of 21.7 billion rand (US$1.5 billion). Of that, 9.2 billion rand was to cover old debt and 12.5 billion rand was for working capital requirements until 2021, he said, with the state providing the requisite funding as per the plan.
The government injected five billion rand in the 2018/19 financial year, with a big chunk of that used to fund creditors up to the end of March 2018, according to Jarana.
“We have not been able to obtain any further funding commitment from government, making it very difficult to focus on the execution of the strategy,” he added.
The airline has had no less than three incidents in which it was almost unable to pay salaries due to the lack of funding, he said.
South African Airlines said in a statement late on Sunday that its board had accepted Jarana’s resignation.