Finance Minister Pravin Gordhan met with the new SAA Board following its approval by Cabinet.The purpose of the meeting was to share with the board the status of the airline and government’s expectations of the Board.
National Treasury outlined the mandate of the board. The primary focus is to return the airline to financial sustainability whilst also delivering on other important government objectives. The executive were encouraged to cooperate fully with the Board to fulfill its fiduciary duties.
The Minister of Finance also announced to the Board that SAA’s application for a guarantee has been approved with conditions which include:-
1. The primary focus of the Board must be to return the airline to financial sustainability.
2. SAA’s strategy must be strengthened and align with other state owned airlines.
3. SAA must implement more aggressive cost-cutting initiatives as in areas of fuel, aircraft ownership, labour, maintenance, repair, overhaul and procurement.
4. The network and fleet plan must be refined based on a sound business case. So that the airline takes advantage of opportunities to scale back the operations of the airline to focus only on operating routes which positively contribute to the profitability of the airline.
5. The airline’s strategy must differentiate the airline, enabling it to continue to compete effectively as well as addressing the customer value proposition.
6. The airline must work with National Treasury and the Department of Public Enterprises (DPE) in giving consideration to the possible merger of SAA with South African Express (SAX) airlines and the potential introduction of a strategic equity partner.
7. The Board is required to start a new process of appointing the Chief Executive Officer (CEO), Chief Financial Officer (CFO) and other key executives in consultation with the Minister.
8. Funding must be secured to meet the airline’s liquidity requirements.
9. The Board is required to ensure that the AFS for both 2014/15 and 2015/16 are finalised.
10. SAA is required to report progress on a regular basis to National Treasury.
11. A communication protocol was outlined for communicating progress as developments arise.