NEWS
05/06/2018 07:20 SAST | Updated 05/06/2018 07:20 SAST

SAA CEO Bets R100,000 Of His Own Money That Airline Will Turn A Profit In 2021

Vuyani Jarana has taken up a bet by Free Market Foundation Leon Louw, that he will give R100,000 to charity if his turnaround strategy fails.

Netwerk24

SAA CEO Vuyani Jarana is so confident that the airline's latest turnaround strategy will work, that he has agreed to put his money where his mouth is. According to TimesLive, Jarana has taken up the challenge from Free Market Foundation executive director Leon Louw to pay R100,000 of his own money to charity if the turnaround plan fails.

Louw will pay the same amount to charity if the strategy works.

Jarana has vowed that by March 31 2021, SAA will turn a profit.

Louw reportedly said in a statement that some may dismiss the bet as a PR stunt.

"It is not," he reportedly said.

"Does he [Jarana] really believe that SAA will make a profit in 2021? It is easy to gamble taxpayers' money; not so one's own‚" Louw said.

SAA reportedly responded: "As a sign of his personal commitment to the cause‚ the airline's CEO‚ Mr Vuyani Jarana‚ commits to match the pledge for R100‚000 from his personal resources. We are not oblivious to the seriousness of the situation and the new leadership [CEO and board] did not walk blindly into the situation when they accepted their responsibilities.

"The announcement that the airline will unshackle itself from a bout of perpetual losses by year 2021 is a realistic assessment of its own strategy which has been reviewed‚ stress-tested and whose implementation is already underway."

In an interview with Fin24 on Monday, Jarana reportedly said it was time to take some tough decisions at the airline. Speaking on the sidelines of the International Air Transport Association annual general meeting in Sydney, he reportedly said the supply chains and "cost base issues" were now being tackled, and hinted at possible restructuring of the airline.

He said: "The current operating base is not sustainable for the airline. We have to take hard decisions regarding people and the supply chain. Job losses will be inevitable, even though my priority is about job preservation by finding ways to find opportunities for our excess pilots and cabin crew to soften the impact. I have a heart. It is not just about cutting jobs. If we grow again, we will need them again, so we have to be sensitive and conscious about it."

According to Reuters, government has promised another R5-billion capital injection to bail out the airline, which has not turned a profit in seven years. SAA has reportedly received over R20-billion in bailouts.

Jarana reportedly told Reuters in May, "Government has committed to inject another R5-billion into SAA. Part of that R5-billion we will repay some of the creditors, suppliers, then the balance will support us for working capital until around October/November."

In response, Treasury reportedly said the bailout has to go through normal approval processes, including getting the go-ahead from Cabinet. The outcomes of the process will probably be announced in the Medium Term Budget Policy Statement, presented in October, Treasury reportedly said.