SAA breaks into three to improve agility and accountability

SAA to break into three business units as part of a restructuring plan, says CEO Vuyani Jarana.

On Monday, SAA CEO Vuyani Jarana announced that the struggling state-owned airline will be broken into three business units as part of a restructuring plan.

During a briefing, Vuyani said: 

"We are evolving into an operating model of three business units.We want to build a new SAA, fit for the future, place the right people in the right job.” 

The three units, domestic, regional and international, will each have their own management, rather than decisions being centralised, in a bid to make the airline more agile and increase accountability.

The domestic unit will focus on flights that operate solely through South Africa.

The regional unit will stretch to routes and destinations across the continent, with a heavy focus on Southern Africa. 

The international unit is for longer-haul flights that cross continents. 

Jarana also said the firm was exploring the partial sale of its catering unit Air Chefs as part of the restructuring.

SAA hasn’t made profit since 2011 and was bailed out by the government last year, with R5 billion allocated in the medium-term budget policy statement to help it face a looming debt crisis. 

The airline currently has R19.1 billion worth of government guarantees, of which R14.5 billion has been used and in March next year, one billion of this will be maturing.

In January, SAA received R3.5 billion from lenders to keep the company going until the end of March, but still needed an estimated R21.7 billion to implement a three-year turnaround strategy. 

But its finances were dealt another blow last week when it was ordered to pay R1.1 billion to rival Comair to settle an anti-competition case. 

Finance Minister Tito Mboweni is expected to announce some form of financial assistance for the airline when he tables his 2019-2020 budget in parliament on Wednesday.