Recovering SA Express plans to expand in Africa
THE state-owned regional airline SA Express — which had its accounts handed over to the auditor-general last year because of the chaotic state of its books — reported a modest profit of R650,000 for the 2012-13 financial year, from a loss of R365m the year before, chief financial officer Zanele Ngwenya told reporters after the carrier’s annual general meeting yesterday.
The airline made progress in addressing the loss of financial controls within the company and also recorded operational and cost saving improvements.
Public Enterprises Minister Malusi Gigaba, who also attended the meeting, said at this point in the airline’s turnaround there had been no need for a bail-out by the state.
Mr Gigaba said no application had yet been made to the Treasury, and described the performance as a “great improvement”.
“The airline achieved 64.7% of the agreed targets compared to 41% achieved in the 2011-12 financial year,” he said.
Commenting on growing the business on the continent, the carrier’s chairman, Andile Mabizela, said yesterday SA Express wanted to find partners to enter into joint ventures and alliances with to grow its business in Africa.
“There will be a lot of scope to do deals and joint ventures outside of our relationship with SAA (as a feeder airline) … and with SA Express now being a Star Alliance member that will create its own opportunities,” Mr Mabizela said.
SA Express had to “reflect” on the opportunities in Africa and how best to capitalise on them against the background of increased competition, Mr Mabizela said.
Revenue increased 14% to R2.29bn, while operating expenses were stable at about R2.33bn, Mr Ngwenya said.
The full accounts were not distributed as they are yet to be pre- sented to Parliament.
In a statement released later, the airline said cash utilisation had been reduced to R133m, from R234.2m the year before.
Despite the improved operating performance, the airline’s accounts did not get a clean bill of health from the auditors, who qualified their audit opinion. There were four areas of concern to the auditors, according to Mr Ngwenya.
These included the valuation of property, plant and equipment — specifically rotables, which are often high-value spare parts such as engines or generators — which were highlighted as an issue by Nkonki, the airline’s previous auditors who had repeated, public fallouts with the previous board. Many of the former board members were fired by Mr Gigaba.
Mr Ngwenya said the finance team was obliged to go back to the year 2004 to try and account properly for rotables at the airline, which is even further back than the previous effort, which had to trace the value back to 2007.
The second problem identified in the audit was the accounting for inventory, stock and consumables, Mr Ngwenya said. The third issue highlighted by the auditors was the absence of a policy to account for and manage irregular expenditure at the carrier, he said. Because of the absence of a policy, it was not possible to say how much money the airline had spent irregularly.
The fourth matter was the incorporation of two special purpose vehicles within the airline that were used to acquire aircraft that dated back to 1997, when SA Express was still part of Transnet, Mr Ngwenya said.