SAA Names New Acting CEO as Chairman Redraws Airbus Deal

  • Zwane becomes seventh acting, permanent CEO in four years
  • Chairman Myeni proposes Airbus sell A330s to leasing company

South African Airways appointed Musa Zwane as the state-owned carrier’s seventh acting or permanent chief executive officer in less than four years as Chairman Dudu Myeni confirmed plans to renegotiate a deal to lease five A330 aircraft from Airbus Group SE.

Zwane, the head of the airline’s maintenance unit, replaces Thuli Mpshe after she held the position for less than four months. The switch came as Chief Financial Officer Wolf Meyer resigned, one of a series of departures from the company’s senior ranks in recent months.

Zwane was appointed “due to operational demands within the business,” SAA spokesman Tlali Tlali said by text message on Tuesday. The company plans to make an announcement later this week regarding the CFO position, he said.

SAA, which has been cutting costs to ease a dependence on government-guaranteed loans, had renegotiated an order for 10 A320 aircraft earlier this year in favor of leasing five more modern A330 models, a plan that was to save about 1.4 billion rand ($98 million). The unprofitable carrier has now proposed an alternative plan whereby Airbus sells the planes to an unidentified South African leasing company, Myeni wrote in Johannesburg-based Business Day newspaper on Wednesday.

The company is working to meet conditions set by Finance Minister Nhlanhla Nene before he’ll consider a request for a new credit guarantee. Finalizing the Airbus swap transaction structure was one of the conditions, National Treasury spokeswoman Phumza Macanda said Nov. 12. The Treasury took responsibility for the airline’s turnaround after it was transferred from the Department of Public Enterprises in December.

The National Treasury is considering SAA’s proposal after the airline submitted an application to change the Airbus deal on Nov. 16, Deputy Finance Minister Mcebisi Jonas told lawmakers on Wednesday. Nene doesn’t want any change to the agreement that would weaken SAA’s financial position and risks associated with the deal, including legal risks, must be mitigated, Jonas said.

Currency Fluctuations

Leasing directly from a South African company would ensure that SAA isn’t exposed to currency fluctuations, as the lease agreement would be rand-denominated, Myeni wrote on Wednesday. SAA has received written formal proposals from financial institutions and banks to arrange the full payment for the five A330 aircraft, she said. Myeni also reiterated a plan to expand “aggressively” in Africa, while defending market share on long-haul routes.

SAA named human-resources manager Mpshe acting CEO after Nico Bezuidenhout returned to his role as head of the company’s low-cost unit Mango in July. Other departures this year include Chief Strategy Officer Barry Parsons, who left the company in July, and director Anthony Dixon, who resigned this month. Meyer’s departure was “mutually agreed” and the parties have decided not to release any further statements on the subject, Tlali said.

SAA has also been operating under an interim board since October, and the Treasury said in September that the process to appoint a permanent board had taken longer than expected. The government will probably approve a new board in the “next couple of weeks,” Jonas said.

The board is in the process of finalizing and approving the airline’s annual financial statements for the year through March 2015, which must be tabled in parliament by Jan. 15, Jonas said in an interview on Talk Radio 702 on Wednesday.

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