CEO of South African Airways (SAA), Vuyani Jarana, has reiterated that there are no plans to privatise the airline. He was replying to a question on the issue posed to him at the 2018 Southern African Transport Conference (SATC), which took place at the CSIR International Convention Centre in Pretoria last week.

The South African government pronounced in 2017 that it would include private sector participation in SAA and that there would be an equity partner involved.

Jarana explained that trade union Solidarity had taken steps to place SAA into business rescue. He said that Solidarity had done this because it wanted a sustainable national airline that would not retrench staff and which included private sector participation.

He added that the labour union further desired an airline that would not burden the fiscus.

“We have ongoing conversations with a number of unions, although Solidarity was not a part of the conversations initially. We brought them in to understand the context of what they are trying to achieve through the process of business rescue.

“We explained that what they want to achieve has already been stated by the government, so there is no need to go through a business rescue,” said Jarana.

Jarana said the airline needed to amend the commercial delivery side of its operations. He explained that the framework to do this needed to be correct.

“We are trying to bring back the commercial logic. We are in the business of moving customers from one point to another safely and comfortably. But we also have to do this profitably. So, commercial logic is about understanding the market; knowing where to fly; how we fly and how frequently we fly, while balancing customer demands and expectations. It is also about how SAA buys assets and at what price,” he said.

“We are taking a comprehensive review of the heart of the business. The good thing about SAA is that the airline’s operations are solid; it is a good airline that has a challenge with its business logic. We have to make hard decisions as a business. We have looked at what the market is telling us, which is that there is more demand for low-cost carrier services.”

Jarana conceded that most of SAA’s domestic routes are plagued by negative gross profit margins. “We will restrict the inventory of full service carriers because we are carrying passengers where we have no prospect of making money.