South African Airways Chairman Ousted in Boardroom Shake-Up

JOHANNESBURG (Capital Markets in Africa) – South African Airways Chairman Dudu Myeni will leave the state-owned airline in a shakeup of the board scheduled for early next month, as the finance ministry puts new management in place to turn around the unprofitable carrier.

Myeni, who is friends with South African President Jacob Zuma and heads his charitable foundation, is the most prominent of a number of directors being replaced following the arrival of new Chief Executive Officer Vuyani Jarana. Deputy Chairman Tryphosa Ramano, also chief financial officer of cement maker PPC Ltd., is among those to be ousted, one of the people said.

“I do not respond to cabinet leaks,” Yunus Carrim, chairman of Parliament’s finance committee and an African National Congress lawmaker, said by text message.

Myeni has overseen the unprofitable airline as it struggled under a series of temporary leaders, and the finance ministry was forced last month to bail out the carrier to avoid it defaulting on a 3 billion-rand ($221 million) loan. Jarana will start as permanent CEO on Nov. 1, and the former Vodacom Group Ltd. executive has pledged to reassure the airline’s lenders that the carrier can return to profit for the first time since 2011.

One of their demands was that Myeni be removed, Business Day newspaper reported Thursday, without saying where it got the information.

South African Airways CEO-Elect to Woo Banks as Top Priority

Peoples Bank Ltd. Chairman JB Magwaza was named as a replacement for Myeni. Former Sasol Ltd. executive Nolitha Fakude will be Ramano’s replacement as deputy chairman. The Treasury also appointed four new non-executive directors. They are Geoff Rothschild, a former director at stock exchange JSE Ltd., NM Rothschild & Sons South Africa Pty Ltd. CEO Martin Kingston, Ahmed Bassa and Tinyiko Mhlari.

A group of South African lenders led by Nedbank Group Ltd. — and including FirstRand Ltd., Standard Bank Group Ltd., Barclays Africa Group Ltd. and Investec Plc — are prepared to negotiate a refinancing of debt through March 2019, people familiar with the matter said earlier this month. One of their conditions is that SAA appoint a restructuring expert, and the airline is trying to hire British aviation expert Peter Davies to meet that criterion, they said.

Myeni had her contract extended for a year in September 2016, having served on the board in some capacity since 2009. Ramano was appointed last year as part of a previous management reshuffle.

The chairman “has done untold damage to SAA and should not have been reappointed to the board, and certainly not as board chair,” Alf Lees, a member of the opposition Democratic Alliance party and the shadow deputy finance minister, said in an emailed statement. “Make no mistake, this reported restructuring of the SAA board and the removal of Myeni is far too little, too late to save the airline. There is no saving SAA.”

SAA reduced flights to the South African cities of Port Elizabeth and East London as part of its turnaround plan. The carrier will also scale back routes to Luanda, the capital of Angola, and Kinshasa in the Democratic Republic of Congo.

Source: Bloomberg Business News