Board faces grilling in Parliament

THE DA will attempt to get to the bottom of the issues plaguing SAA at the appearance of the airline’s board and executive before Parliament’s finance standing committee tomorrow.

DA spokesman Alf Lees said yesterday that the airline’s preliminary results for the 2014/15 financial year tabled last week revealed the extent to which SAA had been mismanaged.

Lees said the report did not include the auditors report and was not signed off by the board – issues that subject the results to “material changes”.

“It is disconcerting that some 18 months after the end of the financial year and some 12 months after the due date for the report, the auditors only now raise technical difficulties,” Lees said. “We suspect that the auditors will be looking at the anticompetitive claims lodged by Nationwide and Comair airlines that are likely to cost SAA more than R1.1 billion and have not been adequately provided for. These would increase the losses of R4.67bn to some R6bn or more.”

Losses in subsidiaries shot up this much

According to Finance Minister Pravin Gordhan, the finalisation of the 2014/15 report had been delayed because “a number of technical difficulties were raised by the auditors at the last minute”.

The report highlighted just how dire the financial situation at SAA was, whereby it stated that the “shareholder has approved a further perpetual guarantee to ensure that SAA remains solvent and has access to sufficient working capital to continue operating as a going concern”.

This clearly demonstrated the heavy reliance on government-backed guarantees.

Less said besides the massive R4.67bn loss recorded, the report also revealed serious management issues. He said the total losses for the three-year period amounted to R8.67bn, and irregular expenditure went up to R68.5 million, an increase of 241 percent.

Lees said fruitless and wasteful expenditure went up 275 percent to R52.7m and losses in subsidiaries shot up 62.1 percent to R214m.

He said R224m worth of aircraft spares were written off as obsolete. “In order to get to the bottom of the issues identified in the report, the DA will relentlessly interrogate (SAA board chairwoman) Miss (Dudu) Myeni and other executives,” Lees said.

Lees said some of the questions needing answers were SAA’s operational plan to avoid further government guarantees, when the airline would be able to release the government from guarantees and whether Myeni would agree to cease to act as both board chairwoman, as well as actual chief executive, as instructed by Gordhan.

“The DA looks forward to receiving full and comprehensive answers when the committee meets with Dudu Myeni, the deputy minister, and the National Treasury director-general on Tuesday in Parliament,” Lees said. – ANA