Deanw
29th Jun 2005, 13:01
Finance Week: 2005-06-29
Mayday! Mayday!
Stephen Mulholland
MARIA Ramos, CEO of Transnet, has her work cut out to bring sanity to the affairs of South African Airways, the national carrier. The recent history of SAA has been, to put it mildly, bizarre. Who can forget, for example, that Coleman Andrews, the smooth-talking American operator, departed with almost a quarter of a billion rand of taxpayers' money - courtesy of the incompetence of then Transnet CEO Saki Macozoma and his merry band of directors.
Andrews performed that old financial card trick of massaging the balance sheet so as to reflect decent returns at the operating level. You know, writing up tired old assets and taking the difference into profits. But somehow those smart and seasoned members of his board bought his story and the rest is, of course, history.
It's gathered that Macozoma, currently deputy chairman of the Standard group, who not so long ago confessed that he didn't know how the stock market worked - is a hot contender for the position of chairman of the remuneration committee at Standard. And, given the largesse he doled out to Andrews, who can blame his fellow Standard directors for backing him for the post?
Coleman is now ensconced in the fashionable resort town of Jackson Hole, Wyoming, where his neighbours include United States Vice-President Dick Cheney and Hollywood superstar Harrison Ford. I was clearly in the wrong business.
Andrews, as is well known, was succeeded by SAA's then chief financial officer André Viljoen. This worthy then apparently decided that he was an expert in the affairs of that financial graveyard known as the foreign exchange market. He promptly dropped R8,7bn of SAA's money by, basically, going short on the rand when it touched R14 to the US dollar, before recovering dramatically to less than R6 to the greenback. At least Andrews didn't cost them that much.
Maria Ramos was forced to arrange a multibillion rand lifeline from Government to keep SAA in the air. She then brought on board Khaya Ngqula, who, we're told, had performed wonders at the Industrial Development Corporation. We should have been warned.
The IDC is not a proper business and isn't judged by proper business criteria. It has one shareholder - the State - and is beholden to nobody but politicians and public servants, who are consumers and not creators of wealth and perform accordingly.
Anyway, in marched Ngqula to kick over the tables and restore order. Apparently, this worthy has a home in the South of France. (Dammit, I really should have gone into the airline business.)
So, feeling the need to make a quick visit to London, the new CEO of SAA decided that it was far too much trouble to go to nearby Toulouse by chauffeur-driven limo and fly first class direct to London. No, it was better to go to the trouble of chartering a private jet to take him and who knows who else to London for a quick R20 000 stay at The Dorchester. And it was only a hundred grand for the jet against R3 000 for the direct commercial flight.
That, of course, was in addition to the charter of helicopters to shuttle him around the northern suburbs of Johannesburg. Yes, we all know the city is choking to death on its roads but if all CEOs decided to go by helicopter that would create its own problems. Further, choppers cannot just land anywhere. Presumably, Ngqula has his chauffeur-driven limo waiting for him
at each of these landing points. One suspects there's more ego than efficiency involved here.
Recently, Ngqula popped off to Delhi in India to be around for the closing of a deal to lease three of SAA's new A340-300E aircraft to India's Jet Air for two years. Once again, there seems to be controversy, as it now emerges that SAA could have leased these aircraft more profitably - to the tune of more than R100m - to a rival Indian airline, Air Sahara.
Given what the previous SAA board allowed to happen, perhaps we taxpayers - in other words, shareholders - can expect the new members to use a greater degree of perspicacity and control over its executives.
Not least among its concerns should be the matter of the training and qualifying of pilots.
Last week the grandly entitled "Executive Vice-President for Human Resources and Transformation" - one Nolwazi Qata - was suspended from her office. This lady is, according to reports, a forceful and determined individual. Nothing wrong with that. Unless, of course, that sort of attitude collides with the sensible running of an enterprise such as an airline.
Apparently, Ms Qata was insistent that an aspirant trainee pilot - Michael Ranft - be appointed as a pilot in spite of the fact that he had been repeatedly tested and failed. Having been exposed to a simulated flight experience, this unfortunate fellow went off on six weeks' leave due to stress. He'd probably need six years after flying a few hundred passengers in a large jet.
Anyway, Ms Qata wasn't interested in anything but the acceptance by SAA pilots of the instruction that they fly with Ranft. They refused. She lost and we can all take heart from that.
It's understood that SAA's veteran pilots - mainly whites, as blacks were excluded under apartheid - are enthusiastic about bringing in pilots of colour but on the non-negotiable condition that standards are not lowered. Not all of us can fly on chartered jets, but when tucked into our economy seat on the way back from a Test match in Durban, it's good to know that, whatever race or gender your pilot might be, he or she will be competent.
Mayday! Mayday!
Stephen Mulholland
MARIA Ramos, CEO of Transnet, has her work cut out to bring sanity to the affairs of South African Airways, the national carrier. The recent history of SAA has been, to put it mildly, bizarre. Who can forget, for example, that Coleman Andrews, the smooth-talking American operator, departed with almost a quarter of a billion rand of taxpayers' money - courtesy of the incompetence of then Transnet CEO Saki Macozoma and his merry band of directors.
Andrews performed that old financial card trick of massaging the balance sheet so as to reflect decent returns at the operating level. You know, writing up tired old assets and taking the difference into profits. But somehow those smart and seasoned members of his board bought his story and the rest is, of course, history.
It's gathered that Macozoma, currently deputy chairman of the Standard group, who not so long ago confessed that he didn't know how the stock market worked - is a hot contender for the position of chairman of the remuneration committee at Standard. And, given the largesse he doled out to Andrews, who can blame his fellow Standard directors for backing him for the post?
Coleman is now ensconced in the fashionable resort town of Jackson Hole, Wyoming, where his neighbours include United States Vice-President Dick Cheney and Hollywood superstar Harrison Ford. I was clearly in the wrong business.
Andrews, as is well known, was succeeded by SAA's then chief financial officer André Viljoen. This worthy then apparently decided that he was an expert in the affairs of that financial graveyard known as the foreign exchange market. He promptly dropped R8,7bn of SAA's money by, basically, going short on the rand when it touched R14 to the US dollar, before recovering dramatically to less than R6 to the greenback. At least Andrews didn't cost them that much.
Maria Ramos was forced to arrange a multibillion rand lifeline from Government to keep SAA in the air. She then brought on board Khaya Ngqula, who, we're told, had performed wonders at the Industrial Development Corporation. We should have been warned.
The IDC is not a proper business and isn't judged by proper business criteria. It has one shareholder - the State - and is beholden to nobody but politicians and public servants, who are consumers and not creators of wealth and perform accordingly.
Anyway, in marched Ngqula to kick over the tables and restore order. Apparently, this worthy has a home in the South of France. (Dammit, I really should have gone into the airline business.)
So, feeling the need to make a quick visit to London, the new CEO of SAA decided that it was far too much trouble to go to nearby Toulouse by chauffeur-driven limo and fly first class direct to London. No, it was better to go to the trouble of chartering a private jet to take him and who knows who else to London for a quick R20 000 stay at The Dorchester. And it was only a hundred grand for the jet against R3 000 for the direct commercial flight.
That, of course, was in addition to the charter of helicopters to shuttle him around the northern suburbs of Johannesburg. Yes, we all know the city is choking to death on its roads but if all CEOs decided to go by helicopter that would create its own problems. Further, choppers cannot just land anywhere. Presumably, Ngqula has his chauffeur-driven limo waiting for him
at each of these landing points. One suspects there's more ego than efficiency involved here.
Recently, Ngqula popped off to Delhi in India to be around for the closing of a deal to lease three of SAA's new A340-300E aircraft to India's Jet Air for two years. Once again, there seems to be controversy, as it now emerges that SAA could have leased these aircraft more profitably - to the tune of more than R100m - to a rival Indian airline, Air Sahara.
Given what the previous SAA board allowed to happen, perhaps we taxpayers - in other words, shareholders - can expect the new members to use a greater degree of perspicacity and control over its executives.
Not least among its concerns should be the matter of the training and qualifying of pilots.
Last week the grandly entitled "Executive Vice-President for Human Resources and Transformation" - one Nolwazi Qata - was suspended from her office. This lady is, according to reports, a forceful and determined individual. Nothing wrong with that. Unless, of course, that sort of attitude collides with the sensible running of an enterprise such as an airline.
Apparently, Ms Qata was insistent that an aspirant trainee pilot - Michael Ranft - be appointed as a pilot in spite of the fact that he had been repeatedly tested and failed. Having been exposed to a simulated flight experience, this unfortunate fellow went off on six weeks' leave due to stress. He'd probably need six years after flying a few hundred passengers in a large jet.
Anyway, Ms Qata wasn't interested in anything but the acceptance by SAA pilots of the instruction that they fly with Ranft. They refused. She lost and we can all take heart from that.
It's understood that SAA's veteran pilots - mainly whites, as blacks were excluded under apartheid - are enthusiastic about bringing in pilots of colour but on the non-negotiable condition that standards are not lowered. Not all of us can fly on chartered jets, but when tucked into our economy seat on the way back from a Test match in Durban, it's good to know that, whatever race or gender your pilot might be, he or she will be competent.