SAA financial woes hit heavy turbulence
Airline fails to submit audits to Parliament
SAA’s financial woes have deepened after it failed to submit its audited financial statements in Parliament because of liquidity challenges.
Public Enterprises Minister Pravin Gordhan told Speaker Thandi Modise in a letter yesterday that both SAA and SA Express (SAX) would not submit their financial statements until it has got its house in order.
The law requires that departments and state-owned entities had to submit their annual reports with audited results by the end of September, but SAA and SAX failed to meet this deadline.
This comes at a time the South African Pilots Association (Sapa) has threatened a strike at SAA unless management and executives fixed the airline. The National Union of Metalworkers of South Africa (Numsa) and the SA Cabin Crew Association (Sacca) backed the strike by Sapa.
The unions said they rejected any plans to privatise SAA.
The government has for years been talking about the merger of SAA with SAX and Mango. One of the plans was to find a strategic equity partner.
Minister in the Presidency Jackson Mthembu said two weeks ago that plans for the merger of SAA with SAX and Mango were still in the pipeline.
The National Treasury has provided SAA with a cash injection of R5.5 billion until the end of the financial year. In addition, SAA needs R2bn in working capital until December.
In his letter Gordhan said SAA and SAX could not submit their audited financial statements because of cash challenges. “The boards of SAA and SAX have not been able to finalise and submit the annual reports to me within the PFMA (Public Finance Management Act) prescribed timelines. Both airlines are experiencing serious financial challenges and are unable to meet going concerns,” wrote Gordhan.
“The SAA board has informed me that the newly appointed interim CEO (Zuks Ramasia) and the interim CFO (Deon Fredericks) need more time to submit the required information for audit to the Aauditor-General SA for the 2018/19 financial year,” stated Gordhan.
Numsa and Sacca said it could not be business as usual when the airline was facing severe problems.
Former chief executive Vuyani Jarana resigned in June after almost two years in charge.
The cash crisis at SAA has been going on for some time, and the National Treasury has over the last few years given it bailouts amounting to R20bn.
Gordhan said the audited financial statements of SAA and SAX would be submitted in Parliament as soon as the issue of the financial challenges was addressed. SAA told Parliament a few months ago that it would be able to break even in the next two years, but it required billions of rand.
The ANC has in the past rejected calls by opposition parties to privatise SAA. Finance Minister Tito Mboweni has said SAA must be sold off; the state cannot continue to bail out SOEs.