re posted from BLACK OPINION
Response by Dudu Myeni to Mail & Guardian article of 17 April 2020
May 17 , 2020
Your article titled “Without a clear plan, SAA stood no chance’ published on 17 April 2020, was very poorly researched and hollow in its’ articulation of the issues that have led South African Airways to its current predicament. In addition, your article contained a number of untruths about me thus I write to challenge the false statements you have made. More specifically, I challenge the statement about me derailing transactions at SAA for my personal gain. There is no truth in that statement and I challenge you to produce the evidence you rely upon to publicly make such a contumelious and defamatory statement about me.
One of the many tragedies of post-colonial Africa is the subservient posture our leadership often adopts in fawning at expertise from so called “international experts” when the record has repeatedly shown this to be obliquity and folly. I draw parallels on how the demise of SAA resembles what many Nigerians now lament in the 1986 implementation of the Structural Adjustment Policy as directed by
“international experts” that; in a raft of economic policy measures, pushed Nigeria to pursue a policy of devaluing its currency without realizing any benefits from this. The Nigerian economy despite being a major crude oil producer has never been able to regain its footing and recover from the negative consequences of having pursued that Structural Adjustment Policy. The story of SAA is in my view a similar one, thus one cannot do a proper analysis of SAA without factoring the legacy decisions dating back to the late 90’s and early 2000’s that have been the albatross that has now suffocated SAA. While it may suit the popular anti Zuma narrative and agendas to drag my name in writing the SAA obituary, I deem it necessary to remind you of the crucial facts that you and your ilk conveniently choose to forget.
The first of these being the 1998 appointment by Saki Macozoma of American consultant Coleman
Andrews as CEO of SAA of whom it was said at the time; was the “international expert” who would turn the fortunes of the airline. In 1999 SAA had debt of about R4 billion and assets of an equal amount. In 2000 SAA reported a profit of R350 million which led many, including Macozoma, to falsely claim that the airline had been turned around when in actual fact these profits were mere cash flow injections from the sale of SAA assets by Coleman Andrews. Among the assets sold was no less than 15 fully paid aircraft from the SAA fleet that SAA immediately started leasing from their purchasers. That R350 million profit wasn’t worth anything in any event because in his less than two year stint SAA CEO, Andrews appointed his own company, Bain and Company, as consultants that earned R209 million in consultants fees. In the same period, another R118 million was paid to nine other expatriates he had appointed to executive positions at SAA. Andrews’ golden handshake was no less than R232 million made in part of 18 million SAA shares initially given to him at 1cents each and bought back from him by SAA at R2,50 each. Macozoma, defended Andrews and his golden hand shake saying “We now have a viable airline instead of the shambles we had in 1998.” As we all know, the so called “shambles” remained and the interventions in the subsequent years that were intended to rectify the problems created by Andrews were only treating symptoms of the problem and in effect exponentially compounded the problems.
Maria Ramos took over the reigns at Transnet and she too embarked on a loss-making trajectory that is also conveniently forgotten. In November 2003 Ramos told parliament’s committee on Public Enterprises that SAA had budgeted to post a R1,8-billion currency loss in the 2003/04 financial year on top of the R6-billion loss reported in 2002/03 financial year as a result, in part, of a decision to hedge the rand at R10,80 to the dollar over 10 years. This currency hedging decision had been driven by Ramos while she was the Director General to her husband at National Treasury. She shortly thereafter moved to Transnet to oversee its implementation at SAA. Again another government intervention was needed to the tune of another R4 billion. The following year SAA reported a loss of R8,7 billion and it was then that process of reconfiguring the orders for new aircraft with Airbus began. Ramos pushed for the orders to be converted from outright purchases to leases. These leases were agian financed in foreign currency and at internationally linked interest rates. That is the dark hole where all the government bailouts keep sinking. These long term aircraft lease contracts became increasingly onerous on the airline as the local currency depreciated from around R6 to around R14 to the US dollar. With every set of SAA leadership including my own, that was the chronic ailment the airline could not overcome. The operating costs of leasing the entire fleet of aircraft in foreign currency with a continuously depreciating currency is what has eventually killed SAA. This truth is known but not spoken of because it does not suit the narrative the media handlers want placed in the people’s minds.
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