9 February 2020
Let us get the common cause facts out of the way quickly: SAA, a state-owned entity that is supposed to be a price moderator in the aviation space and a source of national pride, is teetering on the brink of collapse. It has in excess of R17-billion debt and has never made profit since 2011. With each passing financial year, successive managers have pleaded for state bailouts because they could not ensure alignment between costs and revenue. This parasitic dependency and burgeoning debt, in the end, have necessitated the arrival of business rescue practitioners.
Our understanding of the role of the practitioners is that they will evaluate which routes within and outside the republic are profitable, which are not, why and then recommend a particular course of action aimed at saving SAA.
The decision this week to cancel almost all domestic routes, leaving only one route to Cape Town and a few routes to major international cities has riled many, especially premiers of KwaZulu-Natal and the Eastern Cape. They argue that this decision spells doom for their respective provinces which rely on a lot of domestic travel for tourism. KwaZulu-Natal premier Sihle Zikalala even suggested that this was tantamount to sabotage for the KwaZulu-Natal economy.
A fundamental flaw of the discourse at the moment is a dearth of crucial data used in decision-making. For example, what was the basis of sustaining the Cape Town route and not one to Durban? On the surface, we should be able to assume that one is profitable while the other is not. But what are the numbers informing such an assumption? How much will SAA save by not going to Durban? Only the rescue practitioners know. If the recommendation is to cancel the routes, why is that privileged information?
For the record, we do expect the practitioners to cut redundancies and save costs. We also do expect a level of transparency. But the current trajectory suggests a staged shutdown of the airline, with a level of subterfuge involved.
In business, we can’t just have faith in rescue practitioners and hope their decisions are correct even without data to help us.
Without this, how would the practitioners respond to cynics who claim the route to Cape Town is saved simply for the enjoyment of politicians who are based in parliament? The point is that business rescue practitioners must play open cards not just with the unions who they ought to consult – without seeking permission from – but also the shareholder (government), which represents all of us.
All of us must be agreed that SAA can’t keep going back to government, dipping into our taxes simply because it’s inefficiently managed. If, for example, the route to Durban does not make sense, the rescue practitioners must indicate how many times SAA flies to Durban per day and explain why a reduction, for example, may not be sufficient to stop the bleeding and explain why a complete shutdown is required.
We are not sentimental about routes. We believe though facts are crucial for debate and rescue practitioners are behaving like quasi-messiahs whose words must be accepted without question when they fail to do the basic thing of providing critical data which informs their questionable decisions.
