SAA appoints new CEO
The latest reshuffle by board chairwoman Dudu Myeni follows the resignation of chief financial officer Wolf Meyer and the suspension of head of commercial Sylvain Bosc‚ who is not expected to return to the airline.
Meyer‚ Mpshe and Bosc were critical of governance practices after Myeni placed herself in an executive role.
Meyer was particularly critical of Myeni’s attempts to renegotiate a contract with Airbus to lease five A330 aircraft‚ in a deal that the Treasury has warned would have deleterious financial consequences.
The chief executives and acting chief executives since 2012 were: Siza Mzimela (resigned); Vuyisile Kona (acting but suspended by board after a few months); Nico Bezuidenhout (acting); Monwabisi Kalawe (suspended‚ then resigned); Bezuidenhout (acting again); and Thuli Mpshe (acting).
It also emerged yesterday that Myeni had finally submitted an application to the finance minister under section 54 of the Public Finance Management Act to approve the renegotiation of the Airbus contract.
This is a necessary step before a new deal is signed.
Myeni’s insistence on renegotiating the deal has been puzzling as the deal had been renegotiated as recently as March‚ in the process securing savings of R1.5-billion for SAA. In this renegotiation a contract to lease 10 A320 or narrow-body aircraft was swopped for one to lease five A330 wide-body aircraft.
But with Myeni’s change‚ the contract will automatically revert to its previous iteration and these savings will fall away.
In Business Day yesterday, Myeni provides for the first time the rationale behind renegotiating the deal. Instead of leasing the aircraft from Airbus‚ she says SAA would prefer to lease them from a domestic company.
“Leasing directly from a South African company will ensure that SAA is not exposed to currency fluctuations‚ as the lease agreement will be rand-denominated.
“As most of the airline’s revenue is in rand‚ SAA always needs to manage its foreign currency exposure‚” she writes.
SAA has received proposals from financial institutions and banks in SA‚ which would “facilitate the full payment of the purchase price of the five A330 aircraft”‚ she says.
Finance Minister Nhlanhla Nene’s spokeswoman‚ Phumza Macanda‚ said for the proposal to be approved‚ it needed to demonstrate how a renegotiated deal would be better for SAA.
Aviation finance experts said the choice of a rand- or a dollar-denominated lease depended on a range of factors. However‚ in general terms‚ as aircraft are dollar-priced assets‚ it is difficult to avoid the currency risk‚ which even a domestic financier would price into the contract. — BDLive