http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.22Change: -0.23
R/$ = 11.16Change: -0.09
Au 1240.10 $/ozChange: -4.17
Pt 1243.50 $/ozChange: -18.70
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Oct 15, 2012

Gigaba hints to yet more SAA support, but wants new plan first

Back
Public Enterprises Minister Malusi Gigaba on the role of a task team in devising a new turnaround plan for SAA. Camera Work & Editing: Darlene Creamer. Recorded: 15.10.2012.
Public Enterprises Minister Malusi Gigaba responds to concerns over a possible blurring of corporate responsibilities at SAA. Camera Work & Editing: Darlene Creamer. Recorded: 16.10.2012.
previous next
Flow|Mango|Public Enterprises|Road|South African Airways|South African Express|Airline|Flow|Route Network|Transport|Well-run Airline|Adam Seeda|Malusi Gigaba|Nico Bezuidenhout|Siza Mzimela|Vuyisile Kona
Flow|Road||Flow|Transport||
flow-company|mango|public-enterprises|road|south-african-airways|south-african-express|airline|flow-industry-term|route-network|transport-industry-term|well-run-airline|adam-seeda|malusi-gigaba|nico-bezuidenhout|siza-mzimela|vuyisile-kona
© Reuse this



Public Enterprises Minister Malusi Gigaba has set a December 15 deadline for the delivery of a “road map” for turning around loss-making national carrier South African Airways (SAA), which reported another loss of R1.3-billion in 2011/12, contributing to cumulative losses of around R14-billion over the past few years.

The State-owned airline had, over a ten-year period, also received cumulative shareholder support of more than R15-billion to facilitate its survival and was recently granted a controversial R5-billion guarantee from the National Treasury to stave off immediate liquidity threats.

Gigaba hinted to yet further “shareholder support” on Monday, which could flow on the back of a “robust” plan that delivers financial independence, operational efficiency and a long-term strategy to “become a competitive and well-run airline”.

The “immediate” focus, though, would be on cost cutting and revenue enhancement measures to stabilise the business, whose 6% rise in revenue to R23.9-billion in 2011/12 was more than offset by a 17% rise in operating costs to R25.2-billion. The “cash burn” was so intense during the year that the airline’s cash and cash equivalents fell from R2.3-billion in the previous financial year to a negative R33-million by the end of March, 2012.

However, the business model, structure and strategy would also be reviewed by a Ministerial task team led by SAA’s current executive chairperson Vuyisile Kona, the chairperson and the CEO of South African Express respectively, Andile Mabizela and Inati Ntshanga, Mango CEO Nico Bezuidenhout and acting deputy director-general for transport enterprises at the Department of Public Enterprises, Adam Seedat.

The task team would provide the Minister with “a consolidated view on the critical success factors for the turnaround”, as a well as a turnaround plan.

The plan would have to show how SAA could be made independent of government support over the medium term; outline a route network and fleet plan that ensured earnings made domestically and regionally were not “rubbished” by losses associated with long-haul routes; and incorporate safeguards against exogenous shocks, such as the rise in fuel costs. In 2011/12, fuel costs rose 36% from R6.1-billion to R8.3-billion.

The task team would also interrogate bottlenecks in the decision-making processes at the level of the shareholder, particularly where these impeded flexibility and the implementation of decisions that were urgent for the commercial viability of the airline.

Gigaba indicated that he was sensitive to a possible “blurring” of roles between the shareholder, the board and the executive and said he was studying a board-led submission to him on how to mitigate that risk.

Deadlines for both the finalisation of the turnaround plan and the selection of a new CEO, following the October 8 resignation of Siza Mzimela, were held up as key to ensuring that the roles were not distorted.

The new SAA board would need to complete the selection and recruitment of a new CEO within three months.

Agreement had also been obtained from the remaining executives that there would be an increase in remuneration packages for the foreseeable future.

“I am determined to see to it that SAA gets on the path towards recovery. We do not have the luxury to fail and I shall, hence, brook no indecision on anybody’s part,” Gigaba stressed.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Economy News
A well-documented challenge facing the construction industry is the across the board skills shortage, which has the potential to seriously affect the sustainability of the sector. “Within construction people are our greatest assets and the Stefanutti Stocks group is...
JOHANNESBURG (miningweekly.com) – The Royal Institution of Chartered Surveyors (RICS) has appointed TC Chetty as South Africa country manager, tasking him with leading RICS through the next stage of its strategic development in the country. Chetty previously served...
European airliner manufacturer Airbus has signed a Letter of Intent (LoI) with the Tianjin Free Trade Zone (TJFTZ) and the Aviation Industry Corporation of China (Avic) which reconfirms a programme to establish a Completion and Delivery Centre for A330 wide body...
Article contains comments
More
 
 
Latest News
Swedish Ambassador to South Africa Christian Meuwly will next week inaugurate the final roll-out of the new vertical shaft brick kiln (VSBK) at clay brick manufacturer Langkloof Bricks’ facility in Jeffrey’s Bay. The VSBK formed a part of economic, social and...
Hot on the heels of the launch of Rustenburg’s rapid transport system’s brand name and logo last week, a negotiation framework agreement (NFA) has been formally agreed to and signed by the Rustenburg Local Municipality (RLM) and taxi and bus operators affected by the...
The runway at the George Airport, in the Western Cape, has been rehabilitated to improve safety, in terms of run-off and storm water drainage, and the structural capacity of the pavement surface. The scope of work comprised the extension of Runway 11/29, the...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
 
 
 
 
 
This Week's Magazine
Integrated energy and chemical company Sasol has partnered with Unisa Graduate School of Business Leadership (SBL) professor and founder and CEO of PanAvest Partnership Dr Douglas Boateng to publish a series of books on executive supply chain management aimed at...
MORNÉ DU PLESSIS Increased urgency and burgeoning awareness of the importance of these issues are beginning to change political risks and, thus, State responses to environmental concerns
The World Wide Fund for Nature’s (WWF’s) 2014 Living Planet Index (LPI) indicates that there has been a 52% decline in vertebrate species since 1970. The Index tracked the trends of 10 000 discrete populations of over 3000 vertebrate species between 1970 and 2010.
Rwanda has joined a number of East African countries seeking to import electricity from Ethiopia as its demand grows. After it became apparent several generation project it is implementing will not come on stream early enough, now plans to import 400 MW from Ethiopia...
Metrorail’s first new passenger train will arrive in November next year, says Passenger Rail Agency of South Africa (PRASA) CEO Lucky Montana. “Next year we will be able to put our hands around the infrastructure and equipment we have been talking about for so long.”
The Competition Commission has launched an investigation into what it says are “price fixing, market division and collusive tendering in the market for the manufacture and supply of automotive components to original equipment manufacturers” (OEMs, or vehicle...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks