SAA losses skyrocket to R3.5 billion

Replies to questions by members of the Standing Committee on Finance from South African Airways (SAA) have revealed that the projected losses for the 2016/17 year amount to a massive R 3,5 billion. This represents a staggering R 2 billion increase compared with the R 1,5 billion loss declared in the 2015/16 year.

There is no doubt that these massive losses will mean that SAA will once again run out of cash and will have to pull out the begging bowl to get another government guarantee hand-out.

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.

It is greatly concerning that this is R 1,8 billion more than the R 1,7 billion loss that was projected a mere four months ago. This will represent a real cash loss as it will not contain the R 1,9 billion Airbus deal impairments that contributed to the R 4,9 billion loss in the 2014/15 year.

It must be asked whether the 2015/16 loss was massaged down to make the old SAA board and Chairperson, Ms Dudu Myeni, in particular, look like they were making good progress.

The new board of SAA has clearly not been able to turn SAA around or even just stem the massive losses. The board is hamstrung by the apparently poor and incompetent leadership of its chair Dudu Myeni.

This once again reinforces the DA’s view that the reappointment of Ms Myeni as the Chair of the SAA board was irrational.

SAA can 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.

The DA has asked that SAA produces a cash flow analysis for the 12 months of the current 2017/18 financial year. This will enable the full extent of the bankruptcy of SAA to be seen.

The DA is even more convinced that the only way to stop the monumental losses is to put the airline into business rescue and we will therefore make every effort to ensure that the Minister of Finance takes action to achieve this.

Statement issued by Alf Lees MP, DA Shadow Deputy Minister of Finance, 17 March 2017