SAA board, management placed on notice to turn things around fast

The Board and management of South African Airways have been placed on notice to urgently implement immediate interventions to ensure the turnaround of the beleaguered state-owned enterprise, the ministry of public enterprises said on Sunday.

In a statement, it said SAA's executive management has been tasked with "addressing the airline's cost-base, stopping all fraudulent contracts, disciplining and instituting appropriate civil and criminal actions against all persons inside and outside the business who are implicated in corruption". They also need to prepare SAA for a "strategic equity partner in the near future".

"SAA is a good airline, but a poorly run business," the ministry said. "Bad decisions were made by previous boards and management, including allowing corruption to incapacitate the airline. Against this background, the immediate priority for the Ministry of Public Enterprises, is to stabilise SAA financially ... to turn it into an airline that is financially and operationally sustainable."

The ministry went on to say that the recent appropriation of R5bn in the mid-term budget provided the airline with some financial stability while the executive management implemented turnaround measures.

"This is the path to ensure the future sustainability of the airline, the preservation of jobs and for SAA to become a vibrant competitor in the aviation market in South Africa and globally," it said.

In his mid-term budget address, Finance Minister Tito Mboweni highlighted the plight of state-owned enterprises, saying their finances remained weak. Treasury also pointed out that SOEs with a poor financial position pose a fiscal risk.

"Without restructuring, there is a significant risk that the weak financial condition of state-owned companies will put major pressure on the public finances," Mboweni said at the time.

He has since called for SAA to be closed as it was a "loss-making" business, which was a drain on state coffers.

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