South African Airways is denying a report that it will split into three units.
News surfaced yesterday that beleaguered South African Airways would split into three separate entities, one for domestic, one for regional, and one for international flight routes.
South African Airways CEO Vuyani Jarana was quoted as the source for this news:
We are evolving into an operating model of three business units.
We want to build a new SAA, fit for the future, place the right people in the right jobs.
But spokesperson Tlali Tlali later said comments from Jarana were misinterpreted by media.
We are not looking at a situation of breaking up the airline. SAA as an airline remains, but the manner in which it conducts business will be aimed at bringing in more business and create accountability in terms of operations.
As poorly managed as South African Airways is, it is likely good news that one inefficient organization will not become three inefficient organizations with more overhead and more potential for waste.
Not that dividing the airline into three units would have assuredly failed. Perhaps it would have created a competitive environment and increased accountability. But with fierce regional and global competition and documented corruption at SAA, decentralizing the airline seemed more likely a recipe for disaster.
South African Airways is still far from viable. Absent frequent government bailouts, the airline would be unable to service its debt. The question is whether any reform can actually make a difference or if SAA will always be a loss-leader for the Republic.
image: South African Airways