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A South African Airways aircraft is seen at O.R. Tambo International Airport in Johannesburg, South Africa January 12, 2020.
The office of the Auditor General says it has concerns about the continuing operations of South African Airways (SAA). The Auditor General, Transport Minister, Barbara Creecy, and the board, as well as the executive of SAA, briefed Parliament’s Portfolio Committee on Transport on the entity’s 2024/25 financial year.
The entity has received a disclaimer audit outcome, with SAA – SAA Technical being the main concern, while SAA Airchefs have shown slight improvement on its audit outcomes.
The briefing by the AG’s office did not paint a good picture.
According to the representative from the AG’s office Thato Kunene, the airline’s future may be in question.
“Operational point of view, which means looking at the income versus the operating expenses, it’s not sustainable, but looking at the balance sheet, we are of a little bit of confidence because of the property that the entity is holding. I think they were like, somewhere around R5.2 billion, and also there are some off-balance sheet assets mainly related to the to the landing rights that may be. Perhaps they can boost the financial position. But with the other items being mistreated or unable to confirm them, there’s always a question that we will raise with regards to the balance sheet,” says Kunene.
His colleague, Mamello Thebe, says among internal audit not being functional, rampant irregular expenditure, weaknesses in procurement and contract management, there is no consequence management.
“Irregular expenditure is significantly higher than fruitless and wasteful expenditure. And the major cause for irregular expenditure is due to the lack of consequence management, hence, employees are not following disciplined processes. So, what we note is because there isn’t any consequence management, people are free to some extent to not follow the disciplined processes because they know that there isn’t any accountability mechanisms that are in place to hold them accountable.”
SAA Chairperson, Sedzani Mudau, says they are concentrating on ways to ensure that the airline stays afloat.
“As AG observed, our property portfolio is unencumbered, so there is an opportunity to leverage on that. We don’t have long-term borrowings, but, however, as they’ve observed, working capital management and liquidity is that which we are also as a board managing quite closely to make sure that we are able to manage the airline into sustainability as well.”
Transport Minister, Barbara Creecy, made it known that she is not satisfied with the financial performance of SAA.
“As minister responsible, not happy to have any entity under my authority with repeat disclaimers, not happy. While it is understandable why it couldn’t come out of disclaimer space, important to say, not acceptable to the shareholder. There was a moderate profit declared, from sale of heath row slot, some improvement in passenger numbers and revenue, we are still a long way off from being a profitable entity.”
The Chairperson of the Committee, Selelo Selamolela, has instructed Creecy to submit a report on how consequence management will be enforced at SAA.
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