Em­bat­tled SAA says its losses keep go­ing up and up; R3.5bn for this year

Saturday Star - - NEWS - MAYIBONGWE MAQHINA

SOUTH African Air­ways dropped a bomb­shell yes­ter­day when it told Par­lia­ment that its pro­jected losses for this fi­nan­cial year would amount to R3.5 bil­lion.

This was re­vealed in a re­sponse to ques­tions asked by the fi­nance stand­ing com­mit­tee when it en­quired about op­er­at­ing losses should the eco­nomic e nv i r o n ment b e c o me un­favourable.

In its re­ply, the em­bat­tled na­tional air­line said it was fo­cused on grow­ing its rev­enues and to con­tinue to ap­ply cost-cut­ting mea­sures.

It also said it was op­er­at­ing in a very com­pet­i­tive in­dus­try and was aware of the risk from the ex­ter­nal fac­tors.

“The board wishes to clar­ify that the com­pany has not re­duced its losses for the year un­der re­view, which we pre­sume refers to the 2016-17 fi­nan­cial year.

“The bud­geted loss for 2016-17 was set at R1.76bn, but the re­vised fore­cast refers to an ex­pected loss of R3.5bn,” SAA said in its re­sponse.

The of­fi­cial op­po­si­tion said there was no doubt these mas­sive losses would mean that SAA would again run out of cash and would re­quire a bailout.

“The DA will write to the Fi­nance Min­is­ter, Pravin Gordhan, to urge him to refuse any fur­ther fi­nan­cial as­sis­tance to SAA, which is set on a path to self-de­struc­tion,” the DA’s Alf Lees said.

He said it was greatly con­cer ning that this is R1.8bn more than the R1.7bn loss that was pro­jected four months ago.

“This will rep­re­sent a real cash loss as it will not con­tain the R1.9bn Air­bus deal im­pair­ments that con­trib­uted to the R4.9bn loss in the 2014/15 year.”

He also said that SAA could only be saved if put un­der im­me­di­ate busi­ness res­cue and ac­tion taken to achieve a pri­vate eq­uity deal that would re­sult in cap­i­tal rev­enue for the share­holder and, thus, the tax­payer.

When he tabled the Bud­get last month, Gordhan had warned state-owned en­ti­ties that the Na­tional Trea­sury would keep a watch­ful eye on risks linked to spend­ing pres­sures amid slow eco­nomic growth.

The Bud­get re­view had stated that the fi­nan­cial con­di­tion of state-owned com­pa­nies and pub­lic en­ti­ties rep­re­sents an­other sig­nif­i­cant risk over the medium term.

“Sev­eral state- owned com­pa­nies, in­clud­ing South African Air­ways, re­quire close mon­i­tor­ing and many re­quire in­ter­ven­tion to sta­bilise their oper­a­tions,” the Bud­get re­view said.

It also said state-owned com­pa­nies fac­ing dif­fi­cul­ties must demon­strate tan­gi­ble progress in re­turn­ing to prof­itabil­ity.

“Gov­ern­ment will also ex­plore op­por­tu­ni­ties to ex­pand pri­vate par­tic­i­pa­tion,” the Bud­get re­view said.

Gordhan told the me­dia at the time there would be eq­ui­table fund­ing to be made to the SAA.

“That is work in progress and I will in­form you in due course,” he said.

How­ever, he said if there were new needs within state-owned en­ti­ties, there should be repri­ori­ti­sa­tion.

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