CEO backs airline turnaround strategy with personal bet

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Kerry Hayes

 

South African Airways (SAA) CEO, Vuyani Jarana, has laid his wallet on the block, saying that he will achieve his three-year turnaround strategy goals – or pay R100,000 (€6,748) from his own pocket.

The bet was initiated by Free Market Foundation (FMF) Executive Director, Leon Louw, who waged R100,000 bet with Jarana that the SAA CEO’s three-year turnaround plan would not work by the stated timeframe of March 31, 2021. “The bet was offered before to the previous CEO, which was ignored,” Louw told Tourism Update, “but to Jarana’s credit, he has accepted it”.

The conditions of the bet are in the process of being finalised by auditors and would include requisites such as not being “bailed out” by another grant. “It needs to be genuine operating profit reported for the year, and properly audited without qualifications,” says Louw. It would also include all debts being settled. “Much of the debt is by way of loans,” continues Louw, “and they have to be paid off, not written off”.

Tlali Tlali, SAA’s Head of Department: Media Relations, says that SAA has already begun with the aggressive implementation of its strategy, “a refreshing change which will inject a sense of confidence in all our stakeholders and customers. When the break-even happens at the end of financial year 2021, we will all be winners, not only SAA”.

The proceeds of the bet will go to a charity agreed upon between Louw and Jarana. Louw has recommended the land-title programme, Khaya Lam, which registers title deeds to black South Africans who don’t own their land.

Jarana is yet to recommend a particular charity, however, Tlali says: “Mr Jarana is already a keen contributor to various charitable causes in rural and underprivileged communities. He left a comfortable job to join SAA, and that on its own is a sign of a deeper commitment to turn SAA around, and a commitment to the country, considering the role which a company the size of SAA, as a state-owned company, must play in the economy. His commitment to taking the bet with Mr Louw symbolises his good spirit and a sense of competitiveness. He sees this as an opportunity to share insights with the Free Market Foundation about his strategy for SAA and its implications for the country.”

“Either way, a worthy charity will be getting R100,000,” says Louw, “which amounts to a donation being made to this charity by the two of us. All that remains now is to see which of us will cough it up.”

Asked what triggered this challenge, Louw said it was two things: government bailouts are believed to come from the taxpayer, however in actual fact, it is money being taken away from pivotal sectors such as housing, education, services and policing. “Every rand that goes to SAA is one more person who doesn’t get educated, or who dies in a state hospital.” 

And Louw wants to see an end to this.  

The second trigger was seeing how many times a turnaround strategy has been publicised, yet SAA continues to sink deeper into debt. “SAA is our national carrier, but it carries our flag at half-mast, and it’s a disgrace, and the poor are the people who bear the brunt of this. My second motive is to put an end to shafting the poor. I encourage everyone who flies SAA to look down when they take off from OR Tambo International Airport, see the shacks below them and realise that those people are paying R800(€54) for me to be flying over them.”

South Africa’s national carrier reported a R1.8bn (€127.7m) loss in the fourth quarter of the 2017/18 financial year, and according to FMF has received, to date, R46bn (€3.13bn) in government support, and 2012 being the last time it made a profit.

Louw is, however, complimentary about Jarana’s stepping up to the plate, and accepting the challenge. “This shows that you mean it, and I’m thrilled and it’s wonderful and I hope you succeed. Succeed or fail, between you and me R100 000 is going to a worthy cause. I welcome it; wonderful statement of sincerity of good faith, and all South Africans ought to be thankful that he’s taken this step.

 And I wish him well and have absolute good faith. In the unlikely event that there is anything I can do, I am a phone call away.”

SAA responded to this statement, saying: “The announcement that the airline will unshackle itself from a bout of perpetual losses by the year 2021 is a realistic assessment of its own strategy, which has been reviewed, stress-tested, and whose implementation is already underway. The strategy is a sound commercial remedy for the business, strong enough to yield results we all expect from an investment of the size of this airline. Our confidence and optimism are based on the right mix of energy and talent, as well as the interplay of strategy and leadership, to see strategy implementation to its logical conclusion. 

We meet regularly with many stakeholders, and would take the Free Market Foundation through our strategy too, for them to gain more insights into the work underway if they are willing to have a session with us.”-http://www.tourismupdate.co.za

 

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