SAA losses continue to skyrocket, hitting R5.7bn
The national carrier’s net loss is almost R3bn worse than budgeted
South African Airways (SAA) continued its track record of losses in the 2017-18 financial year, notching up a worse than expected net loss of R5.7bn.
The Treasury released SAA’s fourth-quarter and annual results after a fierce debate in Parliament’s finance committee over whether they should be discussed behind closed doors or in public.
Eventually, the committee meeting — at which SAA CEO Vuyani Jarana and executives and board members were due to brief MPs — was cancelled by acting committee chairwoman Thandi Tobias, despite strong opposition from the DA.
The Treasury release showed that SAA’s net loss of R5.7bn for 2017-18 was significantly (R2.9bn) worse than budgeted as sales plunged on domestic routes 21%, international routes 11% and regional routes 6%. The loss was attributed to lower passenger numbers; a lower average fare due to increased competition and negative sentiment; higher operating costs driven by an increase in fuel costs; and higher maintenance costs.
Earlier on Wednesday, Business Day revealed that SAA’s turnaround plan envisaged a R21bn bail-out by the state if it was to become sustainable.
Revenue of R29.4bn was R2bn below budget, while operating costs of R31.8bn were R400m above budget. The fourth-quarter net loss of R1.8bn was R1.2bn worse than budgeted as SAA carried fewer passengers than forecast and was hit by currency movements.
The Treasury entered the committee debate about closed meetings, saying they were necessary to protect SAA’s commercial strategies.
"Unlike many state-owned enterprises, which operate as sole providers of services, SAA is a commercial enterprise which operates in a highly competitive environment.
"The duty to account to parliamentary committee must be balanced with the degree of protection of the confidentiality of SAA’s commercial strategies," the Treasury said in a statement.
Tobias decided to call off the committee meeting, which was initially publicised as a closed meeting and then became open to the public. She was supported by ANC members of the committee, but strongly opposed by DA finance spokesman David Maynier and deputy spokesman Alf Lees.
Tobias justified her decision on the ground that she needed to consult Hansard, which records committee meetings, about the proceedings of a finance committee in April at which a decision was allegedly taken to have a closed meeting.
The decision was allegedly taken so that SAA executives could provide finer details of their quarterly report without revealing competitively sensitive information.
Tobias said it would take a few days for the minutes of the meeting to become available so she could verify that such as decision was taken. It was on the basis of these facts that she would decide whether the meeting with SAA should be open or be closed.
She said that she had the power to terminate the meeting and insisted that no one could leave the venue with the documents that were handed out. She threatened to call the parliamentary security if anyone refused to hand them over as Lees did. The DA disputed that such a decision to have a closed meeting was taken by the committee as required.
Maynier said that the house chairman of committees, Cedric Frolick, had given his approval for a closed meeting on May 7 on condition that this was approved by the committee.
"The committee has never taken such a decision," Maynier said. He also disputed that Tobias had the power to terminate a meeting.
After Tobias made her decision, Maynier and Lees walked out of the meeting with Lees taking the documents with him. He did not believe they contained anything that should not be in the public domain or that was not already known.
Lees argued that the wasteful expenditure of the SAA delegation travelling to Cape Town to attend the meeting would fall squarely on Tobias’s shoulders as she appeared to have taken the decision to terminate the meeting on her own.
Finance committee chairperson Yunus Carrim is on a trip to China.