EDITORIAL: No pilot for latest SAA flight of fancy
The endless blundering about from certainty to uncertainty, from a commitment to ‘mobilising funds’ to the absence of the same, ultimately has an impact on the cost of SA Inc’s capital
It is now just over a year since former CEO Vuyani Jarana left SAA, defeated by his inability to secure a cash injection from the government and the glacier-like time it was taking the executive, the board, the department of public enterprises and the National Treasury to come to a decision over the airline’s future.
In his resignation letter, Jarana wrote that the "lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed".
That hardly anything has changed 15 months on, including more than nine months of an expensive business rescue procedure, is about as damning an indictment of government incompetence as you could find.
This time last year, SAA’s board was interviewing candidates to replace Jarana and business rescue was not yet on the cards. It is agonising to wonder how much money might already have been saved if the state had simply acted swiftly to appoint a skilled candidate and then given them its full financial backing and left them to get on with the job — like it has, for example, with André de Ruyter at Eskom.
But here we are: once again at an impasse with the airline’s creditors after the failure of public enterprises to "mobilise funds" within an explicit timeframe, after the business rescue plan was formally approved on July 24.
According to insiders, it seems banks are being approached for bridging finance. And we are told that there is a "very clear cabinet commitment" to provide R10.5bn to the rescue practitioners, and that the government "will not allow" SAA to be liquidated.
Finance minister Tito Mboweni has not confirmed this, preferring to tweet pictures of his latest culinary efforts (stewed masonja), though he did tweet that "In politics, you have to be a Team player. Decisions will not always go your way. But you have to accept or ship out!"
However, if you were the Treasury, why would you stump up that money? You’d be handing over precious cash — borrowed cash — to fund, well, what? Restructuring costs?
What exactly is the airline’s strategy? Aside from a mooted equity partner ("unsolicited offers" from 20 or so unnamed private sector investors aren’t exactly a committed deal), there is precious little at this stage to back.
So, there is not much of a plan. And, crucially, there is no captain to manage that plan.
In the aviation world, there is something known as "airmanship", which SKYbrary defines as "the consistent use of good judgment and well-developed skills to accomplish flight objectives".
This good judgment is notably absent from both public enterprises and the Treasury.
Business Leadership SA CEO Busi Mavuso hit the nail on the head this week when she wrote that SAA "does much to affect sentiment on how a fiscally compromised state can boost an economy facing its biggest challenge in 100 years".
R10.5bn isn’t much, if you consider SA’s annual budget — bludgeoned though it will be by six months of Covid lockdowns.
But the endless blundering about from certainty to uncertainty, from a commitment to "mobilising funds" to the absence of the same, ultimately has an impact on the cost of SA Inc’s capital.
While Eskom has often been named the biggest risk to the SA economy, it could be argued that the dithering over SAA is the greater reputational issue. And SA, which now needs greater amounts of costly outside money in the form of loans to pay the wages of nurses and teachers, for example, surely cannot afford this gamble with its good name.
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