SAA losses expected at R4bn

SAA’s losses for the current year are expected to reach R4 billion, the state-owned carrier’s chief financial officer told Parliament.

Phumeza Nhantsi said the reason the company’s losses would exceed a forecast of R2.8bn was largely related to the retirement of five aircraft which forced it to cancel certain flights.

The airline’s new chief executive Vuyani Jarana told Parliament’s standing committee on finance the company would have to find R4 million to pay back to foreign and local lenders by the end of March 2018.

These include US lender Citibank.

He said he saw his main task as “bringing back liquidity” to the company that currently had outstanding debt of R13.8bn.

SAA received its last cash injection from the government in September when Finance Minister Malusi Gigaba released R3bn from the National Revenue Fund to stave off a default by the company on its Citibank debt obligations.

The airline’s executives yesterday attributed the company’s extreme reliance on debt on its weak capital structure, high cost structure, increased competition and over-reliance on leasing aircraft.

It marked Jarana’s first appearance before the finance committee since taking the helm at the airline, which is seen as one of the major fiscal risks to the South African economy.

Committee chairman Yunus Carrim said the spirit of the meeting, including executives’ readiness to answer questions, marked a welcome shift.

The committee was among those to call for the departure of controversial, long-serving SAA chairperson Dudu Myeni. She had been accused of meddling in operational matters and was fired a month ago.