Myeni’s successor up to Cabinet – Ramaphosa

Johannesburg – It is up to Cabinet to decide who will be the new chairperson of the South African Airways (SAA) board, Deputy President Cyril Ramaphosa said during a question and answer session with the National Council of Provinces (NCOP) on Wednesday.

Ramaphosa clarified the role of inter-ministerial committee (IMC) to reform state-owned enterprises (SOEs) in appointing board members.

Ramaphosa, who chairs the IMC, explained that Cabinet deals with the appointment of SOE chairpersons. “We should leave this matter to Cabinet to deal with,” he said.

“The IMC deals with broad policy matters that have to deal with appointment policy of boards. We do not deal with specific names of people who should be appointed.”

Previously, Finance Minister Malusi Gigaba said that Myeni had served as board chairperson for eight years, two years longer than the required two terms of six years. “It is time to hand over to a new chairperson to carry on the good work that needs to be done at SAA,” he told journalists at a briefing in August.

On SAA’s position, Ramaphosa pointed out that the airline industry is difficult. “Airlines are not the most profitable entities and the sector is very competitive. Many have faced headwinds and difficulties in terms of becoming profitable and getting out of the difficult situations that they are in.

“Right now SAA is right there, facing headwinds and great difficulties from an operational and profitability point of view,” he said.

Ramaphosa said SAA has been profitable in the past, but now is facing huge problems that need bailouts only the government can give.

“From the IMC point of view, we have been looking at processes and policies to enable SOEs to operate better.” The IMC is considering how to get boards and management to operate more efficiently, and how to uphold the financial stability of these entities.

Ramaphosa said the IMC strongly believes that if the board is empowered to appoint good management to run the company, it will be in a much better position. “This is precisely what we are doing across various SOEs.”

Now that policy has been set, the IMC is looking into how balance sheets can be managed better and the financing structure improved, so that SOEs won't be driven into bankruptcy.

SOEs have a developmental mandate to fulfill and also need to become profitable. Ramaphosa said it is critical to balance these two mandates.

In the case of SAA, it needs to boost tourism which can create many jobs for the economy, he explained.

SAA recapitalisation

Ramaphosa confirmed that SAA’s debt of R6.8bn would be addressed through a special appropriation bill, which will assist working capital and paying off debt which is to mature at the end of September.

Treasury has drafted the bill which needs to be tabled in a special sitting of Parliament.

National Treasury director general Dondo Mogajane said Treasury will have to plead with Parliament to vote on this on an urgent basis, Fin24 reported. “We hope Parliament will accede to that,” he said. “We will have to appeal to Parliament for the possibility. If there is no possibility, we will have to look to Plan B.”

Ramaphosa said SAA is also discussing the potential extension of the maturity of these loans.

The finance minister and the SAA board will announce the details of such an extension at the appropriate time, said Ramaphosa.

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