YOU’RE MY MAN: President Jacob Zuma shakes hands with newly appointed Finance Minister Desmond van Rooyen, after he was sworn in at the Union Buildings on Thursday. Picture: AFP/GIANLUIGI GUERCIA
YOU’RE MY MAN: President Jacob Zuma shakes hands with Desmond van Rooyen, after he was sworn as finance minister at the Union Buildings in December. Picture: AFP/GIANLUIGI GUERCIA

PRESIDENT Jacob Zuma had intended a wider reshuffle of his Cabinet, say insiders, but axed finance minister Nhlanhla Nene precipitously on Wednesday night, in all likelihood due to the urgency involved in restructuring the South African Airways’s (SAA’s) Airbus transaction.

The wider reshuffle has been on the cards for several months, delayed by a host of unexpected events and political dynamics.

While it was possible to delay the broader reshuffle to continue consultations within the African National Congress (ANC), the restructuring of the Airbus transaction had to be concluded by December 21.

That it was the SAA transaction that compelled Mr Zuma’s immediate action is also borne out by the stance of SAA, which is now anticipating that the revision of the transaction that Mr Nene turned down last week would be revisited by new Finance Minister Desmond van Rooyen.

Questions to the SAA board and to acting CE Musa Zwane on the airline’s intentions with regard to the deal were not answered on Thursday.

But the board has made its intentions clear in other ways. It is notable, for instance, that SAA has not communicated with Airbus in spite of Mr Nene’s statement last Thursday in which he forbade the board to restructure what is known as "the swap transaction" and to implement it immediately.

Instead, in an anonymous comment made to Business Report this week, a board source warned that it was "unlikely to co-operate with Mr Nene and was exploring further avenues for discussion".

SAA management also indicated on Thursday that new instructions were now awaited from the Treasury as a new minister was in place.

The broader reshuffle would have seen several other casualties.

Among those who are particularly vulnerable are Energy Minister Tina Joemat-Pettersson, who has been unable to make significant progress with the nuclear procurement; Trade & Industry Minister Rob Davies, who is under pressure for his stance on black economic empowerment; and Pravin Gordhan, with whom Mr Zuma has fallen out since the debacle at the South African Revenue Service.

However, in reshuffling the Cabinet this week, Mr Zuma is in a politically precarious position.

Relations with both the Congress of South African Trade Unions (Cosatu) and the South African Communist Party (SACP) have become noticeably strained.

Their reactions to Mr Nene’s axing were telling, with the SACP refusing to welcome the appointment of Mr van Rooyen and Cosatu expressing "shock and disconcertion".

The deadline for the Airbus transaction is linked to the history of the transaction, which has been renegotiated several times.

While originally it involved the lease of 20 A320 aircraft from Airbus, this was swapped in March to 10 A320s (already delivered) and five A330s.

The swap arrangement was hugely beneficial to SAA as it saved the airline from paying excessive amounts for the remaining A320s, particularly in the form of pre-delivery payments.

The Treasury was therefore furious when in October SAA board chairwoman Dudu Myeni indicated to Airbus her intention to renegotiate the swap transaction, introducing a third party into the funding and leasing arrangements.

In the interim, Airbus extended the deadline for the predelivery payments to December 21, setting a rigid deadline by which a new deal had to be struck.

Last Thursday, Mr Nene refused permission for the new deal proposed by Ms Myeni. Key among his reasons was that if a third party was to be introduced into the financing arrangements, a procurement process would need to take place. But there was insufficient time for this to happen before December 21. If, however, the procurement process was circumvented, a new deal was conceivable.

On Thursday, the SAA Pilots Association held a second general meeting within a month to reiterate its lack of confidence in the SAA board.

Captain John Harty, chairman of the association, said that the meeting remained unanimous that SAA needed a board that was "fit for purpose".

The association would now engage with Mr van Rooyen, as it had with Mr Nene, on the matter.