The Chief Executive Officer of South African Airways (SAA), Vuyani Jarana has reportedly resigned from the financially stricken state-owned company citing a lack of funding and drop in government support for the carrier’s proposed turnaround plan. The former Vodacom Group executive was brought in about 18 months ago to lead a recovery at the airline, which has been unprofitable since 2011. South African Airways has been mired in mismanagement and corruption scandals.
But a lack of clarity on state funding and the slow nature of decision-making processes persuaded him to resign, according to a letter sent to SAA Chairman, Johannes Bhekumuzi Magwaza. The letter reads, “Lack of commitment to fund SAA is systematically undermining the implementation of the strategy, making it increasingly difficult to succeed.”
South African Finance Minister Tito Mboweni has made clear the government is reluctant to approve a further outlay, saying he favors shutting down the company. Calls made to The board of South African Airways said in a statement it had accepted Jarana’s resignation and thanked him for his service. The resignation was first reported by the Fin24 website. “The SAA board is dealing with the CEO matter,” Pravin Gordhan, minister for Public Enterprises, was said to have said by text message.
SAA secured a 5 billion-rand ($342 million) bailout in the October mid-term budget to help it repay loans, but a further commitment hasn’t been forthcoming, according to Jarana’s letter. That’s made it hard to secure cash from outside lenders, and the airline has approached Bank of China and African Export-Import Bank about funding. Meanwhile, a 3.5-billion-rand bridge facility from local banks expires this month, Jarana said. “The resignation letter appears to strongly suggest that the airline is being forced into administration, deliberately or indirectly, by government,” Peter Attard Montalto, the head of capital markets at research company Intellidex, said.