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SAA financials show losses well above budget
17 May 2018 - by
South African Airways’ financial presentation has been released by National Treasury after Parliament’s Standing Committee on Finance (SCOF) postponed its meeting to review the national carrier’s fourth quarter results.
The presentation, which was meant to be presented at the SCOF meeting, showed that SAA’s nett losses were R1,2bn. The airline had budgeted a loss of R610m in the fourth quarter, with actual losses at R1,84bn. The losses reported in the presentation were mainly driven by revenue and currency translation losses.
Furthermore, it showed that for the year, the group’s nett loss was R2,9bn more than budget, driven both by revenue and operating costs’ performance below budget. The presentation showed that the actual loss was R5,6bn from the budgeted nett loss of R2,8bn.
Vuyani Jarana, ceo of SAA, told Business Day in an interview that the airline needed to raise R21,7bn over the next three years to turn around and become profitable.
In its presentation, SAA said an oversight forum had been set up to address liquidity and capital challenges. Objectives of the forum include addressing the immediate liquidity challenges facing SAA, determining the long-term funding requirements of the airline and the optimal capital structure for it. The forum commenced operations in March and will continue until September.
In response to the Auditor General’s (AG) findings, SAA says it has a detailed project plan that is being implemented. Concerns raised by the AG in 2016/17 in SAA’s qualification areas included the issue of property, aircraft and equipment, of which the root causes were the annual review of useful lives and residual values of owned aircraft.
The AG had also expressed concern about the issue of SAA’s property, plant and equipment, with the root causes being the carrying value of assets more than recoverable amounts and accelerated depreciation on some assets.