SAA’s losses soar by nearly another R1 billion

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 Necessary adjustments in South African Airways’s financial results for 2014/15 saw the company’s losses for that period grow by another R950 million to R5.6 billion, Parliament’s standing committee on finance heard on Tuesday.

The losses on the balance sheet jumped from the R4.7 billion revealed last week by Finance Minister Pravin Gordhan as a result of the need to comply with accounting requirements that apply when there is a timelag between the end of the financial period under review and the signing of the results, acting chief financial officer Phumeza Nhantsi said.

“There is a difference of R950 million. Because there was a delay … whatever happened from year end to the date the financials are signed, you need to look at what happened in that period. What happened was the pending litigation, so we had to increase the provision based on the new information at our disposal.”

The embattled airline faces litigation over its alleged anti-competitive practices. It’s financial results were held back four times while the company sought new credit guarantees from National Treasury to enable it to have going concern status.

Nthantsi said while it was clear that SAA did not simply need savings to get out of the red, but an actual increase in revenue, it should be noted that the company had managed to save R2.2 billion in the three years up to 2015.

Acting chief executive officer Musa Zwane, when asked point blank by MPs whether he would dispute the contention that the airline is technically bankrupt, replied “I won’t” but said he would address the question in full after the financial results were finally tabled next week.

Zwane said the financial losses for 2015/16 had finally amounted to R1.5 billion instead of the figure of R1.8 billion Gordhan mentioned in the National Assembly. Asked whether the greater losses for the previous year would mean that it would seek further credit guarantees from the state, he said it would not.

Deputy Finance Minister Mcebisi Jonas, who led the treasury team to the briefing, brushed aside questions about the re-appointment of board chairwoman Dudu Myeni and appealed to all concerned to focus on stabilising the financial position of the carrier.

“If we fail to bring SAA back to profitability, we would have failed the country,” he said.

Addressing Democratic Alliance MP David Maynier, who demanded that treasury explain how it was overruled to allow Myeni’s re-appointment, he added: “This almost takes us away from the core business we are supposed to be focusing on, this harping on an individual, we are satisfied that we have the necessary skills to take the airline forward.”

“Allow us and allow the board to focus on what we are supposed to do. We think we are poised for greater impact on the airline.”

Asked about the finance ministry’s stated plans to find an equity partner for SAA, Jonas said it would be foolish to do it until the airline had a semblance of financial stability.

“The stance we have taken is we must first secure the financial position of the airline and also look at strategy, make sure we have a strong and solid strategy. We are still, at least as treasury, committed to that view.

“If you look at it now you will probably have a disaster.”

He sounded a warning that within the next few months, several of SAA’s lenders would be expecting repayments. The figures in this regard come to more than R4 billion, according to treasury sources who spoke on the sidelines of the briefing.

“When you look at the balance sheet, short term borrowings are maturing,” Jonas said.

Myeni arrived at the briefing late, saying she fell ill during the night with suspected food poisoining.

In response to questions about her re-appointment, she said: “I never appointed myself.”

– African News Agency (ANA)