For a man used to getting his way, SA Airways (SAA) CEO Khaya Ngqula had to eat a big slice of humble pie this year. His handling of the national carrier's first major strike in more than 30 years proved a baptism of fire for the former CEO of the Industrial Development Corp (IDC).
It was only a few months into his new job and underlined the enormous operational gap Ngqula has to cross to turn around SA's national carrier. The job hasn't got any easier, but at least Ngqula has managed since to refrain from the kind of public relations gaffes that characterised his first few months in office.
Like any new CEO, Ngqula has tried to find the right management team to translate his vision into reality. After a number of high-profile executive changes - such as highly rated, Irish-born airline executive Kyrl Acton, who lasted just six months as chief operating officer - the airline now appears to have a fairly steady management structure in place to improve operational efficiencies. These will become evident, if at all, only later in 2006.
On balance, Ngqula's overriding impact on SAA and the business scene in general has been a negative one, with the week-long airline strike not only costing the airline a bundle but also inconveniencing business significantly.
When Ngqula took over SAA's reins in October 2004 from Andre Viljoen, who had been sacked for a hedging debacle that wiped more than R7bn off the airline's balance sheet, sceptics doubted his ability to run the airline. There were concerns that he did not have operational experience in the sector. But some were willing to give him a chance, saying he had done some good at the IDC and knew how to make money. Crucially, he enjoys the full backing of his political masters, notably public enterprises minister Alec Erwin.
Ngqula was quick to draw up a turnaround strategy, which comprised the usual things that new CEOs tend to do: cost-cutting, whittling down a swollen staff complement, improving operations, restructuring management and improving corporate governance.
But in implementing the strategy Ngqula has encountered many obstacles, many of them outside his control - such as the surging cost of fuel, the main input cost for airlines - but many of them requiring a more deft handling than Ngqula has displayed so far.
Media reports, leaked by unhappy staff, about his extravagant travel habits came at a time when the airline was negotiating wages and working conditions with cabin crew, and even cutting the coffee budget.
Another tactical error was highlighting SAA's R10bn turnaround for the financial year ending March 2005 after airline management had rejected wage demands from cabin crew as financially unaffordable. In any event, Ngqula could not claim sole credit for the turnaround because it had involved a lot of financial engineering by parent company Transnet, and included operational gains achieved by Viljoen.
It hasn't helped his position that SAA has again drifted into the red, having posted an operational loss of R240m for the six months ending September 2005, due largely to record high oil prices.
The humble pie seems to have had a beneficial effect on Ngqula, improving prospects for better staff relations in the years ahead. "Certainly, SAA's attitude has changed somewhat," says SA Pilots Association CEO Piet Taljaard. Though negotiations with pilots are continuing, they are being handled more professionally, he says. And cabin crew have had their working conditions improved.
Ngqula has other issues to deal with which have important implications for the airline's reputation. SAA has decided to appeal a R45m fine for uncompetitive behaviour, imposed by the competition commission, and is accused by the tourism industry, including government's SA Tourism, of hindering the arrival of more tourists in SA by opposing new "slots" for foreign airlines.
It's still too early to say whether Ngqula will succeed in his efforts to transform SAA operationally, which will be the ultimate measure of his success. But his rocky start has left him with some ground to make up.
