SAA problems have always been due to political influence, says Xhanti Payi

South African Airways (SAA) chief executive officer (CEO) Vuyani Jarana tendered his resignation on Thursday.

Jarana has become the second CEO of a major state-owned entity to resign after Eskom CEO Phakamani Hadebe announced his resignation a few weeks ago.

Read: SAA CEO Vuyani Jarana 'resigns' - reports

In his resignation, Jarana described how his strategy to turnaround the national carrier was systematically undermined.

Bongani Bingwa chats to Nascence Advisory and Research economist and director Xhanti Payi and Independent Transport economist Dr Joachim Vermooten about Jarana's resignation.

This resignation is very worrying. What we promised international investors was that South Africa would turn things around and one of the most significant ways we said we would do that was making sure that we had the right people at the top. So when people like Jarana are giving up, it sends worrying signals to everyone.

Xhanti Payi, Economist and director - Nascence Advisory and Research

Payi says the problems in SAA has always been due to political influence.

So when we hear Jarana saying that it is the political influence that undermines the work that they do, one wonders whether or not we will be able to move forward even in a new political dispensation.

Xhanti Payi, Economist and director - Nascence Advisory and Research

He says he now waits to hear from Public Enterprise Minister Pravin Gordhan as to what the way forward will be at SAA.

When you look at Jarana's letter, it is part of him saying: 'Look I tried to do what I tried to do, but it didn't work, please don't blame me.' No CEO takes a job if they don't believe they can do it.

Xhanti Payi, Economist and director - Nascence Advisory and Research

He says SAA has had so many CEOs in the past couple of years, and so many turnaround strategies, that one wonders what can be done to fix the SOE.

Vermooten joins the conversation and says Jarana did implement several things that were compatible with a proper restructuring plan at SAA.

It is a pity that the thrust and implementation cannot continue. The problem is while you are implementing a restructuring plan, the company keeps making losses, and you are behind, and you have to settle some of the debt owed.

Dr Joachim Vermooten, Economist - Independent Transport

Vermooten says it will be challenging to sell SAA in his current nature as it has a shortage of equity which it has more debt than it does assets.

Also read: Comments on the uncertainty about SAA's future undermines the overall business

It needs to either restructured or closed, and those are the only two choices it has.

Dr Joachim Vermooten, Economist - Independent Transport

Listen below to hear what Payi had to say:

Listen below to hear what Vermooten had to say:


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