South African Airways (SAA) CEO designate Monwabisi Kalawe will be expected to become the “custodian” of the troubled national carrier’s long-term turnaround strategy when he takes over in the coming weeks, including those elements of the plan that are already being implemented, such as a network overhaul and a “refleeting” plan.

In fact, Public Enterprises Minister Malusi Gigaba stressed that, given the urgency to place the airline on a sustainable commercial footing, the board and the executive team were already “living” the turnaround strategy, which he formally received on April 2.

The plan would be presented to Cabinet during May as a “courtesy”, as well as to gain endorsement for those aspects of the strategy that could require government support.

Acting CEO Nico Bezuidenhout reported, for instance, that work was advancing on a new wide-body fleet plan, owing to the fact that its current long-haul aircraft were both fuel inefficient and not aligned to the new network plan.

A “firm” wide-body fleet option should be finalised by the end of May and engagements with both Airbus and Boeing would begin within weeks.

Bezuidenhout stressed that SAA had no wide-body aircraft preferences and that the network would dictate the eventual choice.

Gigaba indicated that the new network plan was premised on returning SAA’s long-haul routes to profitability, while consolidating the commercial success of Mango and the airline’s narrow-body operations.

The reformatted network plan was premised on commercial sustainability and on ensuring a “network with an African footprint and a global reach”, supported by a “fleet that is appropriate and efficient”.
The network strategy would also seek to lean more heavily on code sharing alliances, particularly those that were immediately available to SAA through its membership of Star Alliance.

Bezuidenhout encouraged Airbus and Boeing to “sharpen their pencils”, stressing that SAA would not be prepared to “pay above market prices for our aircraft”.

“The manufacturer that produces the best aircraft for our mission length and best serves the commercial objectives of this company, is the one that we will end up preferring,” he added.

Besides the network and fleet plans, a cost-compression initiative was also already under way, having yielded savings of R700-million during the 2012/13 financial year.

Bezuidenhout said efforts were being made to identify further savings, indicating that it plans to be far more assertive in demanding “bang for its buck” from its suppliers, which still perceived SAA as a “soft target”.

CEO TRANSITION

While not outlining Bezuidenhout’s future role in the implementation of the turnaround strategy, Gigaba stressed that Kalawe would be assisted to “hit the ground running” by the board and the executive team.

“The transition from the acting CEO to the new CEO is being managed by the board so that it happens as smoothly as possible,” Gigaba said, noting that Kalawe was still serving his notice as executive chairperson of Compass Group South Africa, a catering and support services company.

“He will hit the ground running, because as he moves over he will find a turnaround strategy that is being implemented,” the Minister said, adding that the board would define Bezuidenhout’s future contribution.

His contribution could be confined to low-cost airline Mango, the expansion of which, including into the rest of Africa, reportedly features as one of the key components of the larger turnaround plan.

Gigaba also emphasised both Kalawe’s private, as well as his public-sector experience, as prior to his involvement at Compass Group South Africa, he also occupied senior executive positions at Denel Munitions and Airports Company South Africa.

Kalawe read for a Bachelor of Science in electrical engineering at the University of Natal, where he graduated in 1987, and completed a Master of Business Administration at the University of Cape Town in 1998.

Acting chairperson Dudu Myeni said that the board was engaging with Kalawe in an effort to ensure that he takes up his position “soon” and confirmed that he would sign a five-year performance-linked contract.