The South African government has begun the rescue of state-owned SAA as the carrier begins the transition from business rescue to full operation.
To this end, the loss-making airline has appointed Thomas Kgokolo as the new interim CEO of the airline. According to his personal LinkedIn page, new CEO Thomas Kgokolo is a “Chartered Accountant and holds an MBA from the Gordon Institute of Business Science (GIBS)”. In his other roles, he serves as the Board Chairperson at the Mineworkers Provident Fund (MWPF), a position that requires him to oversee R28 billion assets under management. He is privileged to be a Non-Executive Director at both Air Traffic Navigation Services and Sizwe Medical Fund. He is a member of the audit committee at the Financial Intelligence Centre and National Consumer Tribunal. Prior to joining GIBS, Mr. Kgokolo acquired experience in the strategy, governance, and financial roles. In the past, he was the Chief Financial Officer at the Competition Commission of South Africa and more recently Chief Executive Officer at the Air Traffic Navigation Services.”The appointment was made by SAA’s interim board and comes alongside three other key interim executive appointments in the human resources, financial, and operations departments.
The flag carrier has been in business rescue since December 2019. Both parliament and the department of public enterprises have been calling for an end to the process and for the rescue practitioners to hand the airline back to an interim board. The rescue practitioners are currently initiating an exit process with plans to hand the airline back to the interim board as soon as possible and that a receivership has been put in place to finalize the last payments stipulated in the rescue plan over the next three years.
The South African national airline is still grounded and a new SAA is expected to emerge much smaller, down to about 1,000 of its previous 4,700 workforce and having returned 40 of its previous aircraft fleet of 49 to lessors.
Due to its dependency on government funding, the SAA dilemma is positioned to impact the country as a whole. South African President Cyril Ramaphosa is making plans to wean the brand off of its dependency on the state, but in doing so may put the nation’s credit score at risk while creating unrest due to the brand’s coming layoffs. As a whole, the airline industry in Africa is facing a number of struggles. A low point occurred in 2014 during which African airlines lost $900M and continued at about a $100M loss per year since. Continued competition on global routes and pressure from low-cost airlines continue to chip away at profits on the continent.
Africa is reputed to be the weakest region of all, with airlines struggling to improve load factors from the world’s lowest level of 61.5 percent in 2018, compared with 81.7 percent globally, according to International Air Transport Association forecasts.