Think and Thrive with Mr Francois Oberholzer - CFO of Flydubai

Good morning, good morning boys, girls. I'm doing well, thanks Luciana.

Yes. So my name is Francois, surname Oberholzer, which is Swiss-Austrian, but I'm neither from France, which is my name, nor from Switzerland or Austria. I'm from South Africa.

I was born there. So I'm African by birth, and so was my family, and my great-great-grandparents were also born there. The history of South Africa is very interesting. We're known as the Rainbow Nation, and that is because we have lots of European ancestry and heritage, as well as lots of African groups and populations. Personally, we try to track and trace our ancestry back, and the best we could find from the records that were kept was that the first of the Oberholzer family arrived in the late 1600s in South Africa as part of the Protestant movement from Europe.

Favorite childhood memory was definitely that we went to the Kruger National Park every year. That was our annual holiday, our annual vacation. I don't know how much you know about the Kruger Park, but it's a big area, similar in size to Switzerland, that was set aside purely for nature conservation.

A naughty kid or a serious one? If you ask my mother, she will probably say I was naughty. I believe I was very studious and serious.

I think it's linked to the fact that my favorite childhood memory was our holidays in the Kruger Park. When I was younger, I always wanted to become a nature conservationist, so a field ranger or someone who worked with wild animals. As I grew up and started thinking in business terms, I started deciding that I wanted to be a businessman. All my school subjects were chosen specifically to put me in the direction of business. I had no science or biology or natural sciences choices in school, so from a very early age I chose the track of business.

I speak three languages, two of them fluently, which is Afrikaans, which is our home language — it's close to Dutch or a form of Dutch — and English, which is the language of business. And then we lived in Germany for a year as part of my career in aviation. I spent one year in Berlin, so I speak a little bit of German as well. And the fourth language that I would say is music. I love music, and I used to play the violin and the trumpet.

Dit is baie maklik vir my, dit is 'n taal wat baie naby aan Nederlands is.

So I just basically said, you know, it's a very easy language for me. It's also sometimes called the duck language, because there are a lot of guttural noises in the language.

I just want them to be happy. I want them to be happy and feel loved. And I think once you get to that stage where you feel loved and you're happy in what you do, everything else starts to fall in place.

Very interesting question. I trained as a chartered accountant in South Africa with a firm called PricewaterhouseCoopers — they're also a very large auditing firm here in the Middle East, probably better known as PwC. I trained and finished my training contract in Johannesburg. One of my clients was an airline, so as part of that training, which really immersed me into aviation, I came out of that knowing that I wanted to be in aviation. It was probably just by pure coincidence — I did not choose which clients to serve; you get divvied up on the first day of arriving at the company and you get told these are your clients. I had luckily a diverse group of clients — some banking institutions, one nuclear power plant, and one aviation airline. And from that day onwards, as they say in our industry, Jet A-1 fuel gets into your veins, because you can never leave the industry. It's really difficult.

No, I never thought that I would ever rise to a chief financial officer position. When I started out, it was really taking opportunities that were presented during my time in airlines, and the fact that you had such a passion for the business helped me to utilize those opportunities.

The three key challenges for us during COVID, and I think it's probably the same in most businesses. The first one was the uncertainty — when you don't know how long you have to survive before business comes back, that is the biggest challenge, because you need to be able to plan. Especially in finance and generally in business, it's all about forward-looking planning. Aviation has got a very long lead time — when you order aircraft, it takes three to four years for them to be built to your specification, and then it delivers over a period of 10 to 15 years. FlyDubai, for instance, placed an order for in excess of 150 aircraft back in 2013 and 2014, and those aircraft deliveries are staggered over 10 years. So you need to be able to plan forward. If you are unable to plan forward, you run into trouble. So that was the first challenge. The second one was cash flow, because any business requires cash flow. As soon as you don't fly, cash dries up immediately — you don't have any income but you still have expenses. Typically, airlines that are cut off from their revenue streams last probably three months if they are lucky, because you still have a lot of fixed costs — mortgages, salaries, suppliers. The third challenge was our human resources. Airlines are service organizations, so we rely on our employees as our key asset. Yes, aircraft is one of our assets, but our real assets are our people. So if you can't pay their salaries, you lose your people. The question was: do we keep them on, or do we let them go in order to conserve cash? Luckily for us, our chief executive officer, Ghaith Al Ghaith, decided no, we will not let anyone go, because we see the light at the end of the tunnel. It won't be forever, so let's keep our people. We all shared the pain — we took 50% salary cuts — and we said let's spread the pain but keep everyone in employment. We did not let anyone go. So as soon as COVID started to ease and the UAE government started very early on to bring business back to Dubai, we were able to bring our key assets, our human resources, back, and fly to destinations, service all the repatriation flights, all the cargo flights during COVID, and generate cash. So those are the three challenges.

Financial health — that Chief Financial Officers are responsible for really relates around two things primarily. One being the management of expenses and revenues, and cash flows as a result, and the second one being reporting. Very important for any business is the shareholder, because we're just the management of the organization — we have no ownership in it. The shareholder provides the equity and the capital for us to be able to buy assets, to generate revenue, and then to pay employees' salaries. But what any investor wants at the end of the day is a return — dividends, share price increases, capital gains. And so the CFO role really needs to make sure that revenues exceed expenses so that there's a profit for the shareholder. We also manage the internal controls of the company to enable proper financial reporting — where auditing comes in, and we also have external auditors that we manage, who come in on an annual basis, sometimes every six months, to audit whether our financial reports that we provide to the shareholder are accurate and true. The entire business and our whole philosophy is integrity. We are there to ensure that whatever financial results are reported to the shareholder and to the markets, if you are listed, is a true picture. You cannot lie to the markets; you cannot provide any information which they can use to the detriment of the investors. So we are there to make sure that inside the company all the systems and processes are in place to ensure that the financial results are reported accurately to the markets.

It's really very important to understand that nobody is perfect. Even though you always put processes and controls in place, I don't think there's anyone that can ever say they've never made a mistake. Our philosophy and the culture within flyDubai is that we don't mind people making mistakes. We put all the controls in place to ensure that if a mistake is made, it's very quickly picked up and corrected, because we're all human. We make sure there are sufficient controls to pick up any mistakes quickly. We have many people checking each other — external auditors coming in to verify the work, people checking our IT systems because a lot of our systems are IT-driven, ensuring there are no computer problems and that we have safe backups. On the operational side, there are also checks and balances in place — no mistakes in maintenance, no mistakes in the piloting of the aircraft. That's one of the things that makes aviation such a fun industry. It's an industry that has learned from its mistakes. When the Wright brothers performed the first flight in the early 1900s, from there onwards it has always been a learning experience, and the aviation industry has always learned from its costly mistakes. That is why when you look at an aircraft, the systems inside always have redundancy — there's no system inside an aircraft that relies on a single point of failure. Each engine is controlled independently, so if one has a problem, the other doesn't get affected. I think it's very important that people know that mistakes are not bad — you have to recover very quickly, learn from them, and make sure it never happens again.

I think the most important is passion. Make sure that you have a passion for what you want to do, because when you have a passion for your job, you will be successful. That is the key message. Don't do it because someone else told you it's a good idea, or you think there will be some benefit. If you don't like it, don't do it. So passion for business, not necessarily passion for accounting or numbers, but passion for the business. Secondly, hone your skills of people management. You have to deal with people — you are selling to people and using people to deliver a product or service. The key to success is communication. That's what attracted me to business — the opportunity to bring people skills together with a passion for business is what made me want to go into general management of an airline. The ability to use teams of people, to coordinate them to work together to deliver something you can sell to the public is amazing. It's not just about the numbers — it's also about the ability to influence people, make friends, and work together with others who might have different temperaments, cultures, and outlooks on life. The ability to identify each one's strengths and weaknesses and make sure the puzzle fits and paints a beautiful picture at the end of the day is what makes the job worthwhile.

Yep.

Boring.

My favorite book is a book titled How to Make Friends and Influence People, written in 1936 by Dale Carnegie. It talks about what I previously mentioned — how to identify people's strengths and weaknesses and what they want, and allow you to get what you want by making friends and influencing them.

Beaches.

I'm a passionate paddler, so I think the last Google search was probably a new type of paddle.

Orange and blue.

Instagram.

Pete Davidson.

2022.

Neither. No, I prefer the McLaren driver.

The best one. Not Daniel.

Best career advice ever received is to follow your passion.

I think space exploration is going to be the next frontier, the next area of business. So I think my fellow compatriot from SpaceX and Tesla has got it right. I think that's probably the next area for big business.

To go into the world of finance, I think make sure that your subject selections allow you the broadest range of possible opportunities, because I really feel that there are going to be so many new functions and jobs by the time you graduate that you will not just be restricted to whatever jobs are out there at the moment. But if you really love finance and you want to become someone who manages the finances of a big organization, follow your passion and make sure that your choice of subjects allows you to go in any direction that passion leads you to. Things are changing so rapidly that you want to have your options open as much as possible. Don't restrict yourself to only a certain way of thinking or a certain direction for studies. Keep your minds wide open and keep your options open.

You're more than welcome.

I'm most proud of the fact that during the last three years, flyDubai managed its own business — we didn't have to go to our shareholder to ask for more money during the COVID crisis. That was driven by two main facts. The first one being that we always knew that the leadership and the shareholder of flyDubai will take care of us no matter what the outcome is. And secondly, the fact that we took care of our people throughout the COVID crisis, and that we are reaping the benefits of that. It's always give and take — you cannot just keep taking cookies out of the jar; at some point the jar is empty, you have to put back some cookies. So that's what really makes us at flyDubai very proud — the fact that we could manage through this crisis without having to ask for more money.

Sorry, just repeat that.

So the main points that drive our business plan is the network — where do we fly to? That's the starting point of our business plan. Are we going to expand our network to fly to new destinations, or are we going to stick to existing destinations and fly there more frequently? These are the key questions we debate every year. Are we able to find new points that link Dubai with the rest of the world, where we can fly and fill our aircraft with enough passengers to make money? So the starting point is our network, which then drives our fleet. Once you've decided your network, you can say: do I have enough aircraft, too many, or do I need more? That sets into action a whole host of further activities — buying new aircraft, or aircraft that can fly further. As I said earlier, that's a three-year process, because even if we order aircraft today, we won't receive the first one until three years down the line. Yes, you can buy second-hand aircraft from other airlines, but then you don't have your product. These are the questions we debate on a weekly basis. Those are the two key aspects in the business plan: know your markets and customers, and secondly, do you have the right assets in place to be able to serve them?

The most difficult decisions would be relating to human capital. Everything else is very much black or white — you look at the numbers and you can make a decision. The most difficult decisions affect our people. Questions like: do we employ more people, or do we give existing people higher salaries and ask them to do more? Especially in the current high inflation, high interest rate environment, a lot of the debate is around whether to give salary increases. People come to us and say, I've been offered a 20% increase if I go and work for another airline. The question then is: do we match the offer to keep the person, or do we allow this person to build their career and take the higher offer, and we replace internally, allowing internal promotions? These are fascinating questions and debates — there's not always a right or wrong answer that you can apply consistently. It depends on the individual and whether there are internal people that can step in. We've recently started internship and apprenticeship programs within flyDubai. We've started with an apprenticeship program for engineers, driven by two things: first, we need to provide career opportunities for UAE nationals; secondly, we need to build a base of young engineers because of the growth we're planning, and it's becoming very difficult to find aviation engineers willing to relocate to the Middle East at the price point we can afford. So if we can't find the resources outside, we need to grow our own. Hopefully the next level would be to start internship and apprenticeship programs for accountants, lawyers, and HR specialists, because we like the model of building and growing our own.

My parents were teachers, so they were not in business at all. They certainly motivated both my brother and myself to work hard and follow our passions. If I think back to turning points in my life, probably the biggest one was quite late, after I completed my studies, and I needed to decide: do I leave South Africa and come to the Middle East? I remember my father saying to me, you need to follow your passion. Don't think about the people in South Africa, don't think about us as mom and dad — we've lived our life, we've done what we wanted to do. You now need to follow your passion. I think that's probably the main driver — it has always been my parents.