FMF media release
12 June 2018
FMF Executive Director, Leon Louw, welcomes CEO Vuyani Jarana’s acceptance of his wager that SAA cannot be saved
“I’m thrilled that Mr Jarana has accepted my wager,” said Leon Louw, Executive Director of the Free Market Foundation (FMF). “I have the highest regard for him and admire his courage in taking on SAA. With his business acumen, if he can’t do it then no-one can. I’m delighted by his belief that he can turn SAA around and I wish him the very best. He has our goodwill and support. Most importantly, whichever way the wager ends, the poor, who have been fleeced relentlessly to pour billions down the SAA bottomless pit, will benefit.”
South African Airways (SAA) CEO, Vuyani Jarana, has accepted Louw’s bet of R100K to charity that Jarana will be unable to turn SAA into a sustainably profitable company in three years, 2021.
“By accepting my wager, he implies it is absolutely the end of the road for this collapsed apartheid dinosaur if he fails,” said Louw. “This is excellent. Unlike his slew of predecessors, he is willing to put his money and reputation where his mouth is and, if unsuccessful, end the SAA farce. We at the FMF wish him well and will do whatever we can to help him succeed. We have, for instance, a Plan B to rescue the SAA brand for South Africa.”
In Louw’s view Mr Jarana is “an astute entrepreneur”. If he does not succeed by 2021 then “the only decent thing for government to do is negotiate a wind-up strategy with role-players such as employees, bankers and leasing companies,” says Louw.
Louw is particularly delighted that “either way the poor, who do not fly, will win because one of us will pay R100,000 to the poor whose welfare budgets have been remorselessly plundered to the tune of 150,000 Nkandlas, to subsidise the rich, who do fly. If I lose, the poor win twice over. Big time. Firstly, with the charity donation; more importantly, they will receive the many billions in government spending, which is rightfully theirs, but is being diverted to bail out SAA.”
However, the FMF is convinced that SAA cannot be rescued and should be wound up immediately. “Regrettably, I must repeat that our view is that SAA cannot be rescued and that, sadly, Mr Jarana will lose his wager.”
Jarana says SAA needs yet another R22 bn of spending diverted from the poorest of the poor merely to break even in three years. Louw: "I hope this is not a departure from his preceding promise of profitability by 2021.”
All that remains, according to Louw is “to clarify the terms of the wager. What, for instance, are the poor to understand by successful turnaround and sustainable profitability? How exactly will R10 bn already received in 2017/8 plus a further R22 bn requested be spent? Will SAA operate profitably without government subsidies or guarantees? Will it have surpluses after operating expenses? Will it be able finance its own aircraft, retrench surplus staff, discharge lease agreements and liabilities, settle its R1.8 bn Comair debt and honour all Voyager miles, for instance? Will Air Chefs and SAA Technical (SAAT) also be profitable?”
When challenged on whether the wager was a cheap publicity stunt, Louw said its purpose is “to get serious answers to serious questions regarding the most farcical of all failed SOEs. When the SAA debacle has ended, I will move onto others”.