SAA Financial Misfortune: Additional Loss Of R 4.5 Billion Recorded For 2016/17

Advertisement

While investigations are underway on SAA’s financial misfortune, more documents reveal a further loss in the state airline’s finance, reaching R4.5 billion for 2016/17.

A document, which was provided to the Standing Committee on Finance (SCOF) by the South African Airways (SAA) board,  reveals a staggering loss of R4.5 billion for 2016/17.

This new figure is significantly higher than the R3.5 billion revealed ten days ago. It is also higher than the R1.7 billion estimated in September 2016.

“This is an increase of R1 billion in the space of ten days and an increase of R2.8 billion in the space of 6 months,” says Alf Lees MP, DA’s shadow Deputy Minister of Finance.

“With a full month of figures left to be reported on, this figure of R 4.5 billion could experience yet another significant increase.

“The DA will interrogate these volatile numbers fully when SAA appears before the SCOF on Wednesday, 29 March 2017, as it is simply inconceivable that SAA financial misfortune have increased by a staggering R1 billion in a matter of weeks,” he said.

Read Also: SA Rand Nosedives As Zuma Recalls Gordhan And Jonas From The UK

Operations in the embattled South African Airlines has not been stable since the past past two years following reoccurring financial debts the company has continuously found itself in.

In September last year, SAA recorded a “pleasing performance” in that despite the volatility of the rand, the airline posted an actual loss of R1.5 billion, not far off the budgeted R1.4 billion, compared with R5.6 billion in the previous year.

But in March 17th this year, the airline projected losses for the 2016/17 year as R3.5 billion. The projected loss of R3.5 billion represents a R2 billion increase from the 2015/16 loss.



The 3.5 billion loss was made known in the replies to questions members of the Standing Committee on Finance asked the South African Airways, and in reaction, Democratic Alliance (DA) party lamented that there was no doubt that the 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 opposition party  went on to disclose that it will write to Pravin Gordhan, the Finance Minister, urging him to reject any further assistance to SAA.

“SAA is set on a path to self-destruction,” says the DA.

“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.

“The new board of SAA has clearly not been able to turn SAA around or even just stem the SAA financial misfortune. The board is hamstrung by the apparently poor and incompetent leadership of its chair Dudu Myeni,” it added.

Meanwhile Minister Pravin Gordhan says the airways will by the end of March have a new CEO.

Read Also: Cabinet Reshuffle Is Imminent, Zuma Will Replace Gordhan With His Ex Wife: COPE

The minister, in his letter sent to the Speaker of the National Assembly Baleka Mbete requesting permission for a delay in tabling the corporate plan for the three years 2017-18 to 2019-20, a new CEO is needed as soon as possible so the person would participate in the corporate planning process.

 The new CEO will be taking over from acting CEO Musa Zwane who has been serving as the airline’s seventh CEO since 2015.