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South African Airways' new CEO outlines priorities

South African Airways' new CEO Siza Mzimela says stability followed quickly by growth are her two top priorities rather than pursuing yet another restructuring.

Mzimela, previously the CEO of SAA regional partner carrier South African Express, took the helm of SAA in March. She replaced Chris Smyth, who had served as acting CEO since March 2009, when the employment of Kyaha Ngqula was terminated following an internal investigation into allegations of business irregularities.

Ngqula led SAA though a tumultuous four and a half years that included two major restructurings that were largely unsuccessful at turning around the loss-making carrier. Late last year SAA's entire board, including the chairman, also resigned and was replaced.

Mzimela says stabilising SAA is her first priority. "Hopefully going forward there will be a lot more stability in SAA," she said during a Star Alliance event last week in Sao Paulo.

Mzimela, the only woman CEO in the 27-member Star Alliance, is confident SAA will be stabilised within the next six months and the carrier will then be able to start pursuing growth again. SAA cut back its long-haul operation and shelved plans to launch several new routes during its last restructuring, which started in early 2007 and ended early last year. The restructuring was SAA's fourth in only 10 years.

Mzimela says emphatically that the carrier does not need yet another restructuring although some additional "realignment" may be pursued. She says after stabilisation her second priority is growth and expects the carrier will undergo an expansion phase in 2011 through 2013.

"We are definitely not looking at another major restructuring," she says. "We are done with the restructurings. The next step is to stabilise. The second is to grow We are going to be growing."

She adds SAA has already started to see traffic recover this year although "we haven't reached double digit improvements yet". With South Africa hosting the football World Cup in June and July, Mzimela expects "there will be a little bit of a boost during that period".

"But we are looking beyond that," she adds, explaining her focus is more on long-term profitability and growth.

The World Cup, however, has driven a series of long-needed infrastructure improvements at South Africa's three largest airports which SAA intends to capitalise on as it enters a period of expansion. At Johannesburg and Cape Town, Mzimela says airport renovations include expanded check-in areas, new lounges and "smoother" international to domestic connections for SAA and Star Alliance passengers.

"The big difference is we are able to provide a much better service for our passengers," she says.

At South Africa's third largest city, Durban, a new airport opened at the beginning of May. Mzimela says SAA's initial operation at the new airport "has gone very, very well".

The new airport opens up for the first time the possibility of long-haul services from Durban, which Mzimela says SAA is "continuing to investigate". The flag carrier, which in 2007 shelved plans to launch several new long-haul routes from its main Johannesburg hub including Chicago, is now studying network and fleet expansion options.

SAA late last year concluded a deal with Airbus which included re-committing to a 2002 order for 15 A320s, purchasing five additional A320s and leasing six A330s. But SAA has not yet selected a new aircraft type for its long-term widebody fleet. Mzimela says the evaluation of Airbus A350s and Boeing 787s, which began in 2008 to meet SAA's long-term widebody requirement, is still "ongoing".

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