24 FlightCom Magazine
While we all want SAA and other inefficient state owned airlines
to be profitable, it is hoped that governments across Africa come to
realise that airlines are the key mode of transport to drive economic
growth and that they protect this fragile industry from the regulators
and service providers.
So can SAA be fixed?
Some at SAA respond by saying that expecting SAA to compete
with airlines such as Emirates who do not have to service our levels
of debt makes no sense. South Africa cannot have it both ways.
SAA is expected to find the money to buy the new aircraft it needs
to fulfil Government’s mandate. It is not only debt but funding
the developmental mandate portion which is important. SAA has
pioneered many routes and once they were viable, the privately
owned carriers came in. The owner of any company is responsible
for providing the resources needed to achieve the objective.
Some of the debts SAA currently have to service were incurred
by CEOs employed by the owner. Their mistakes should therefore
be the responsibility of the owner but in SAA’s case it has to borrow
the money to service this debt, albeit with state guarantees. SAA was
not properly capitalised when it was removed from Transnet and a
hedging loss under a previous CEO has added to its debt burden.
Warren Buffet says that Directors should be chosen for their
business savvy, their interest and their owner-orientation. CEOs
should be given a simple set of commands: to run the business as if- they are its sole owner,
- it is the only asset they hold, and
- they can never sell or merge it for a hundred years.
This paragraph was aimed at asking for good leaders to be
appointed and giving them a long-term mandate rather than force
them to look good in the short-term by selling off the family jewels
(such as slots at Heathrow).
There are those at SAA who want a clear mandate with all
non-economically viable activities ring fenced by the accountants
so that when the media discusses its financial performance, it canseparate its results from that done in the national interest. Many at
SAA believe it would have shown a profit over the past couple of
years had the interest payments on previous debt been removed and
subsidies received for routes flown at Government’s behest. They
feel that SAA does not deserve to be set up for failure and it would be
pointless to do so, bearing in mind the consequences to the economy
or the employees.
Having seen that SAA’s portion of the economic benefit to this
country is huge, the case can be made that such investment is rational
and that helping domestic airlines to prosper is enlightened self-
interest. A campaign informing the taxpayers of why they should
invest in SAA and a marketing effort that shows consumers what
differentiates SAA’s product from that of the competition would be
worthwhile.
SAA would not have received so many awards if it did not
have dedicated staff. SAA staff have argued that if SAA is set free
to achieve its full potential, given leaders that can focus all their
efforts towards the best customer service and teamwork and has the
unnecessary burdens removed, it will silence its critics.SAA would
have shown
a profit over
the past
couple of
years had
the interest
payments
on previous
debt been
Is having a removed.
flag-carrier
representative of a
backward country?Þ