saa scaled
South African Airways (SAA) has a storied 90-year past and a murky future. We first looked at its murky future in 2021. And in 2022. And in 2023. Much like the case of Air India as a state-owned entity, SAA is an example of why states have no business running airlines. There are exceptions, but typically, state-owned airlines fail once the state realizes it cannot keep funding the airline. The government has been trying to offload the airline for years. No surprise, the airline could not make money. The idea of the airline being privatized was discussed 20 years ago.
South Africa suffered from “State Capture” and corruption. This was when Jacob Zuma was president, and that era came with many issues. The airline’s CEO was arrested on fraud charges.
Ms. Myeni, the CEO, had inadequate training and experience for her CEO role. Ms. Myeni obtained her Primary Teachers Certificate from Madadeni College and her Secondary Teachers Diploma from Umlazi College. In 2009, the SAA annual report listed her with a bachelor’s degree in administration from the University of Zululand. It was removed after Ms. Myeni admitted she was “studying toward it” with two outstanding majors. Her primary skill was being a close friend of Mr. Zuma. The story of her tenure at SAA is tragic and, fortunately, unique.
This brings us to the news today about SAA. In 2023, the South African Treasury stated the airline was “no longer technically insolvent.” However, it seems that the assessment was inaccurate. In the words of the state’s auditor-general describing the just published financials: “All those audit opinions are disclaimed. And yes, we are saying a disclaimer is an opinion, but when you look at the report, we are saying we cannot form an opinion because we could not access the financial statements we needed. And this is the worst audit opinion you can get.”
In February 2024, South Africa’s parliament held in-camera hearings (SAA hearings) about SAA’s condition and the state of its deal with Takatso, the potential investor willing to take over the airline.
In December 2023, SAA’s CEO talked the talk. And today, we see his credibility in tatters. Rather than “strong fiscal results,” the state has to inject more funding. Late in December, the airline’s CEO discussed expanding its fleet. SAA has two 737NGs on wet lease from SunExpress in Turkey.
The financials filed by the airline are four years late. The state of the airline is questionable again. Without more state support, it will likely fail again.
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