The chief executive of South African Airways (SAA), Siza Mzimela, stepped down yesterday, just days after Pretoria promised to shoulder R5 billion in loan guarantees for the struggling state-owned airline.
The Department of Public Enterprises said in a statement Mzimela had resigned and the airline’s board would begin a search for her successor. “She will remain with us for some weeks until we find a suitable person to act in the interim,” said Mayihlome Tshwete, the spokesman for Minister of Public Enterprises, Malusi Gigaba. Mzimela was appointed CEO in February 2010.
“I have given this decision careful thought and feel that now is the best time to relinquish my position as your CEO and allow somebody else to pilot the company into the future,” she was quoted by the Business Day website as saying.
Two more managers resigned yesterday following her resignation. Mzimela’s exit comes only weeks after the resignations of chairwoman Cheryl Carolus and eight board members. Shortly after the resignations, Gigaba, appointed eight non-executive directors to complement the remaining members of the board, and appointed Vuyisile Kona as new chairperson. It was anticipated that the terms of the majority of board members would come to an end at the annual general meeting scheduled for 15 October.
At the AGM SAA is expected to report a R1.25 billion loss for the financial year ending March 31.
Last week the government promised to guarantee R5 billion in loans for the airline, a move that could put further pressure on an already strained national budget.
The Department of Public Enterprises said in a statement on October 2 that the R5 billion guarantee would require the airline to develop a turnaround strategy to be approved by it and the finance ministry.
“The guarantee will enable SAA to borrow from the financial markets, thus ensuring that the airline continues to operate as a going concern,” it said.
The airline will also be required to provide the government with its financing strategy for a planned purchase of airplanes, the department said.
“The former CEO has presided over an airline characterised by spiralling debts, operational inefficiencies and an entrenched reliance on bailouts from the National Treasury. These factors have finally brought the wasteful airline to its knees. The airline is now well and truly in a crisis,” said Natasha Michael, opposition Democratic Alliance party Shadow Minister of Public Enterprises, who called for the airline to be privatised.
Michael earlier said that the R5 billion guarantee was “not fair” to other South African airlines, such as 1Time, which recently had to apply for business rescue as it faces tough competition and rising operating costs.
South Africa’s state-owned companies, including SAA and national broadcaster SABC, have come under fire for what critics say is excessive spending of taxpayer money.
In a sign of growing concern about Pretoria’s finances, credit agency Moody’s last month cut its ratings on South African government bonds by one notch, citing the deterioration in the government’s debt profile and uncertain revenue prospects.