One doesn’t have to be a rocket scientist to figure out that South African Airways is in a financial death spiral and that unless the heavy hand of incompetence — that of board chair Dudu Myeni — it is removed from the rudder, it may crash and burn.
There’s a clue in the fact that it has had seven chief executives in three years. A couple were suspended amid allegations of financial impropriety. A couple resigned and a few others were nudged out.
There’s another clue in the fact that its chief financial officer resigned last week. He had been critical of Myeni’s interference in renegotiating a deal with Airbus.
This deal had already been renegotiated back in March, securing savings of R1.5 billion. The subsequent insistence of Myeni in yet another renegotiation, the Treasury has warned, is likely to have seriously negative financial consequences for the airline, which is kept flying only through high-octane government guarantees that now total R14.5 billion.
There’s another clue in the fact that although ostensibly under the oversight of the Treasury, Finance Minister Nhlanhla Nene has at times not been kept briefed by the SAA board. And before SAA was moved to Treasury, while under the control of the department of public enterprises, Myeni was openly defiant of ministerial instructions.
There’s also a clue in the disaffection of its professional staff. Last week the SAA Pilots Association took the unprecedented step of passing a vote of no confidence — by 457 votes against two, with 11 abstentions — in Myeni and the board, demanding that the board resign with immediate effect for flouting their fiduciary responsibilities.
That they did so is not evidence of white resistance to the board’s transformation agenda, as it is being portrayed. It is evidence, given that they knew full well that the board would exact revenge in the form of disciplinary action against them, is evidence of grave disquiet at an impending disaster that the government is doing little to avoid.
So there’s a whole cookie trail of clues pointing to potentially terminal financial distress, including the fact that in January SAA’s auditors initially wouldn’t sign off on last year’s annual accounts, because they had doubts whether SAA was still a going concern. It was only after SAA wheedled yet another financial guarantee out the Treasury, to the tune of R6.5 billion, that it was able to table its financial statements.
All of which makes SAA’s urgent high court action against various media houses this week a futile charade. In the early hours of Tuesday morning the carrier got a gagging order that prohibited the publication of a leaked memo prepared by Ursula Fikelepi, SAA’s head of legal, risk and compliance.
The media affected — Business Day, Media24 and Moneyweb — were apparently not informed of the application, so did not oppose it. They have since indicated that they will appeal against it but in the meanwhile all have withdrawn the reports from their websites, although the ruling came too late to affect the print editions of Business Day, which had already been printed and distributed.
There are two absurdities. The first is the facile notion that one can cork the news genie once it has been let out the bottle.
Anyone who matters, in other words the holders of SAA debt and the entire international financial world, have taken cognisance of the Business Day print report, which also had for some hours existed on the Moneyweb, City Press and BDLive websites, and factored it into their assessments of the carrier. Nor does the order prevent the further circulation of the memo’s contents outside of SA’s borders.
The second absurdity is that while the rest of the world knows exactly what is in the memo, the SA taxpayer, who ultimately foots the bill for SAA, has to squint between the lines to work out what is happening. Given the history of SAA and the fact that court documents are in the public domain, this is not too challenging a task.
SAA’s affidavit gives clues aplenty, were they needed. It talks of “highly confidential information of a very sensitive nature … [which] has the potential of causing real and serious reputational and financial damage” to SAA and the government. Join the dots, dear reader.
In the meanwhile, fasten your seatbelts and assume the brace position.
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