Vuyani Jarana's plan to fix SAA was still bound to crash: Free Market Foundation
Free Market Foundation executive director Leon Louw was adamant on Monday that a bet on a turnaround plan for SAA - under CEO Vuyani Jarana who resigned at the weekend - not working was still in place.
Louw said in June 2018 that he was willing to wager R100‚000 that Jarana's three-year turnaround plan would not work and that by March 31 2021, Jarana’s stated timeframe, the airline would still not be profitable.
Jarana responded to the challenge the same month, pledging R100,000 from his personal resources.
The airline said at the time that an announcement that it would unshackle itself from a bout of perpetual losses by 2021 was a realistic assessment of its strategy.
But the SAA board announced Jarana's resignation on Sunday, a year into the three-year turnaround strategy.
Speaking to SowetanLIVE on Monday, Louw said the wager still stood, despite Jarana’s resignation.
"The turnaround strategy did not require Jarana to be present at SAA when the turnaround period expires in March 2021."
Louw said if Jarana lost the wager in March 2021, he suggested that he donate the R100,000 to the foundation’s Khaya Lam land reform initiative.
Th initiative aims to assist the transfer of title deeds to tenants occupying municipal-owned land and houses under apartheid-era regulations at no cost to the beneficiaries.
The South African Airways Pilots Association said Jarana did his best to turn SAA around under incredibly difficult circumstances.
"We were supportive of his integrity, commitment and vision to right-size SAA and make it fit for purpose.
"We are deeply troubled at reports that the CEO’s turnaround plan was sabotaged internally and externally," the association said.
The association said Jarana was hobbled by inflexible and restrictive government policy as well as the board and shareholder taking active roles in executive decision-making.
The Organisation Undoing Tax Abuse (Outa) said the country could not afford to keep SAA as a wholly government-owned entity.
"Just as we did with Telkom, the time has arrived to allow an external partner with experience in efficient airline management to take a stake in the airline, if it is going to survive," said Outa's executive director, Heinrich Volmink.
Louw said Jarana’s turnaround strategy could never have succeeded.
"It presupposed an exchange rate of R10 to the US dollar, but the exchange rate is 50% higher. It also presupposes the fuel price of $40 per barrel. It is currently at $80 dollars," he said.
Louw said the turnaround plan did not factor in the recapitalisation of the SAA fleet, which was estimated to be in the region of R50bn to R60bn. He is of the view that SAA cannot be rescued.
He said the R21bn that Jarana requested asked from Treasury was the equivalent of 100,000 RDP houses.
"This is the obscene transfer of wealth from the poor to the rich."
The SAA’s response on the wager will be added to this article when it is received.