New salary information sparks fresh outrage around SAA consulting expenditure

The appointment of a number of senior executive consultants to the South African Airways (SAA) board earlier this year sparked outrage in the public, and the revelation that three of these executive alone account for R10 million over just a six-month period has now sparked a fresh bout of public scrutiny.

SAA’s turmoil in recent times has brought to the fore a debate in South Africa that has been ongoing in other markets such as Australia and the UK for a while now: to what extent should the government expend the public coffer to hire expensive consultants from the private sector?

For its part, SAA has been unwavering in its expression of the necessity of external support, defending its expenditure at every step of the way. Much like a number of other public enterprises in the country, SAA is grappling with bankruptcy and debt, but while others have been scaling back their operations or restructuring, SAA’s expenditures in this period has exceeded its focus on damage control.

The entity did scale back to some extent, cutting a number of routes out of its roster, but have negated the positive effects with the continual compensation of 50 staff members who were responsible for the routes, while also losing the R4 billion that was generated in revenues from the same.

Nevertheless, SAA has remained steadfast in the face of criticism, hiring as many as 13 international consultants from some of the leading institutions worldwide to occupy senior executive positions in the board. Given the fact that SAA has already borrowed a staggering R20 billion in the form of bailout packages from the government, the public was particularly outraged to learn that each of these executives was being paid between R2 million and R6 million for the duration of their contracts, some of which were just six months.

“You will not succeed in turning around SAA without the skills. We benchmark salaries here at SAA globally and locally, at the same time keep in mind that these people are executives, they have been working on other projects in other companies and if you are going to entice them to come and work for SAA they will not come for nothing,” said SAA CEO Vuyani Jarana, who was appointed in November last year.

However, a more specified list of salaries has now come to light, which has added fuel to the fire and made things harder for Jarana. SAA’s interim Chief Financial Officer Robert Head , for instance, has been hired for six months, but will be paid R5.5 million for his troubles. Two other consultants have been hired with R2 million+ contracts for six months, while Jarana himself earns nearly R7 million per year.

Moreover, Jarana has indicated that the borrowing from government coffers will not stop any time soon, given that the entity’s strategy going forth involves borrowing another R12.5 billion. The only indication of returns on these heavy investments, meanwhile, comes in the form of a new procurement strategy for fuel that is expected to save as much as R7 billion.