Problem
Read the following case study and answer the question that follows: How SAA landed in such a mess SAA is on its knees - it doesn't have enough cash to pay staff or keep its planes in the air for much longer, and government is currently scrambling to borrow R2 billion to keep it going. Its spectacular implosion has wreaked a lot of damage, particularly on South African taxpayers. More than R16.5 billion in taxpayer money was spent on bailouts to SAA over the past decade. On top of that, last year government committed to settle more than R9 billion in debts that SAA can't afford to pay back. This amounts to more than R5,000 per registered individual taxpayer in South Africa - or roughly equal to a percentage point increase in VAT. And still the losses continue: according to some reports, SAA may have suffered a R9 billion loss in the past year alone - meaning it loses R930 for every passenger it (and is subsidiary Mango) transported. However, the real extent of SAA's losses and its debts isn't clear. The airline hasn't been reporting its results since 2017. As recently as 2011, SAA made a profit. But its problems have been coming for some time. For many years, it dominated all traffic between Africa and the rest of the world. It had few competitors on these routes and much of the air traffic from elsewhere in the world to African destinations was connected via Johannesburg, with SAA having specific rights on African routes. But over the years, new competitors - including Ethiopian Airlines - started to erode its position.
These days, almost all of SAA's international routes are making big losses. The wrong planes Since 1991 SAA has spent billions on a range of Airbus A340 planes, which proved a key pitfall, according to the airline news platform Anna Aero. "These aren't well-suited for the challenges of long-range operations from its hot-and-high hub, Johannesburg (5,500ft). In addition, as fuel prices rose from 2007, the four-engine type was less capable than rival twins or higher-capacity quads used by Emirates, among others." Maintenance problems SAA owns SAA Technical, which maintains its planes, as well as those of other companies like Comair.
Last year, the airlines were forced to ground some of their aircraft for compliance checks after irregularities were discovered during an inspection at SAAT. This came after reports that SAAT used "fake parts" when servicing aircraft, and that a crime syndicate had infiltrated the airline's technical team. SAAT denied this, but finance minister Tito Mboweni later confirmed widespread theft at SAAT, including that "a whole engine" was stolen. FlySafair, which owns its own maintenance arm, has capitalised on SAAT's problems - and continued to fly as other planes were grounded. Leadership turmoil SAA currently doesn't have a CEO after a tumultuous decade of leadership crises. In 2009, CEO Khaya Ngqula was sacked after accusations that he authorised massive bonuses without approval, as well as signing an ATP tennis sponsorship deal worth R120 million without board agreement. His successor Siza Mzimela resigned in 2012 after a dispute with government.
Vuyisele Kona, SAA chairperson, was appointed as acting CEO, but the following year then-minister of public enterprises Malusi Gigaba suspended him following unspecified allegations. The Sunday Times later reported that Kona refused R500,000 from the Gupta family. His successor Monwabisi Kalawe was suspended after a sexual harassment claim and the next CEO, Musi Zwane, was suspended amid accusations that he was "facilitating questionable payments". Vuyani Jarani - a former Vodacom executive - was then appointed as permanent CEO, but quit last year, citing a lack of government support. Other factors Some of the other problems that hurt SAA was government's decision to demand unabridged birth certificates for the minor children of inbound tourists, which had a marked impact on travel volumes to South Africa. Of late, industrial action has also hit SAA. A strike at the airline last year cost the company more than R50 million a day.
Operations Management is an area of management concerned with the design, planning and operation of value-creating processes in organisations. Operations management is all about the best way to turn the strategic vision and goals of the organisation into real products and/or services.
Evaluate how SAA could use the ten decision areas of Operations Management, to transform the organization into a successful airline.