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Brown: SAA to consider strategic partner

Cape Town - The first sign that the government was committed to selling off "non-core" assets came on Thursday when Public Enterprises Minister Lynne Brown said she would like SAA to investigate "going for a strategic partner".

Finance Minister Nhanhla Nene signalled government's intention to find non-core assets in all the state-owned enterprises and entities when he delivered his mini budget on Wednesday.

But at a press conference, Brown was asked if her department and SAA were looking for a strategic partner, she replied: "I think so."

The last time the SAA considered finding an equity partner was in 2010 when it said it was considering hiving off its technical division.

She earlier announced that she would be retaining the embattled entity's board chairwoman, Duduzile Myeni despite the fact that the minister admits the SAA is struggling to be "a going concern"

Read:  SAA chair stays, 2 others on board

She also announced on Wednesday the appointment of Dr John Tambi and Mr Anthony Dixon to the board.

She told a media conference at parliament on Thursday afternoon that cabinet had approved the retention of Myeni and Yakhe Kwinana.

She noted that with the two new members, the board would be six-strong as the CEO and CFO are also members of the board.

Although she acknowledged that the board had been riddled with factionalism, she had retained Myeni and Kwinana for reasons of “institutional knowledge”.
But a candid minister said that it was a matter of “damned if you do, damned if you don’t”.

She said the board had been a little unwieldy with 14 persons serving on it. When the board ended its term all institutional memory was lost.

“What I wanted was something more agile and mobile with harder skills and including that institutional memory. Ms Myeni and Ms Kwinana are definitely the longest serving board members.” They had served on the board since Cheryl Carolus had been chairwoman, Brown said.

Asked if it was appropriate to retain the current chair, who had been accused of leading a faction, Brown acknowledged it had been a difficult decision.

“If (one) chose another way… it would probably be supporting another faction. I have tried to make a decision that gives me the best skill on the board and I think I do need the institutional memory. It is difficult for me.”

When asked how the SAA was staying in the sky as government had in early October refused to bail it out, she said it was living off guarantees from the state. “They get the guarantee from the state, then they go to the banks.” The SAA got a R5 bn guarantee two years ago.

Asked if the SAA would survive till February – the time of the national budget – she hesitated and then said: “We must try for them to survive to February… they are a state-owned company.”

“It is well known that the SAA has been a loss-making airline for the past few years and my intervention (the board restructuring) is aimed to stabilise the situation,” the minister said.

Dixon is a chartered accountant  with 29 years’experience in accounting and auditing at Coopers Lybrand (now PwC) while Dr Tambi has a PhD and MSc from the Polytechnic Institute of New York University and an MBA from Embry-Riddle Aeronautical University. He is a transport specialist.

Brown admitted that the airline was suffering from “gas-guzzling” aging aircraft in the wide-body division, but it had no money to pay for new aircraft. It was like a poor household trying to put cheese on the table, she said.

Asked earlier what non-core activities the SAA could hive off – with the suggestion that Air Chefs may be one – she said she had not thought of that example.

Brown noted the resignation recently of six SAA board members. She told the news conference today that she would have axed them if they had not resigned. “I was going to remove them anyway… but they resigned. All of them were pleased to have the opportunity to serve the airline.”

But she added that the board “has been factionalised… I have said the board has been divided.” Individual members had been “incredibility intellectually hard working people… but collectively (the board) just didn’t work.”

 - Fin24

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