New SAA CEO Vuyani Jarana. Picture: STEPHANIE LLOYD/DAILY DISPATCH
New SAA CEO Vuyani Jarana. Picture: STEPHANIE LLOYD/DAILY DISPATCH

Vodacom executive Vuyani Jarana has accepted one of the most challenging jobs in corporate SA, turning around the sinking state-owned South African Airways (SAA), which has lost billions of rand over the last few years and is saddled with huge debts.

Jarana, who is in charge of Vodacom Business Africa, has been appointed CEO of SAA and will take up the position as soon as Vodacom releases him.

While he has an impressive track record in turning around companies within the Vodacom group, Jarana faces an unenviable task at SAA, where he will have to slash costs, boost revenue and re-engineer the airline.

He will also be implementing a long-term turnaround strategy and corporate plan which he did not formulate.

Jarana’s appointment will bring much needed stability to the executive management of the airline which has been without a permanent CEO since the departure of Monwabisi Kalawe in 2014. There have been a series of acting CEOs, none of them in the position long enough to drive a turnaround strategy to completion — since November 2015 Musa Zwane has been at the helm.

Finance Minister Malusi Gigaba said on Thursday since Jarana “has turned around a loss-making subsidiary of the Vodacom Group, Vodacom Business Africa, into profitable and growth business, we believe he will be key in turning around SAA”. Gigaba said Jarana had positioned Vodacom Business as a growth engine of the Vodacom group, growing its contribution to group service revenues from less than 10% to 25% over three years. He had also transformed the declining Vodacom subsidiary Stortech to growth.

“He built a solid and transformed organisation with emphasis on both top-line business growth as well as margin expansion,” the Treasury statement said.

Jarana has been head of Vodacom Business since 2012.

Appointing a CEO for SAA was one of the goals that Gigaba undertook to achieve by end-July in his 14-point plan for the country’s economy.

DA deputy finance spokesman Alf Lees welcomed the appointment of Jarana, who he said had “an impressive record in business”. He stressed, however, that he could only succeed “if given a free hand to take the robust action that is required in order to ruthlessly cut the bloated cost structure that is dragging the airline into liquidation”.

Lees said it was imperative that SAA chairwoman Dudu Myeni, who had a track record of interfering with management, be replaced. Drastic reductions in the 9,900 headcount would also be necessary.

Meanwhile, SAA’s 2017-22 corporate plan tabled in Parliament on Friday forecasts that the airline will return to profit from 2019-20. Over the next five years R9bn in debt will be settled and the interest burden cut about 86%. Key to the success of the corporate plan will be recapitalisation by the state. SAA says it needs R13bn in state support over three years, of which R3bn will be used for working capital and R.9.1bn to retire the debt that is maturing in the current financial year. According to the plan, SAA’s cash flows are insufficient to cover its operations.

For the first quarter of the current financial year, the airline posted a loss of R1.46bn.

ensorl@businesslive.co.za

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