SAA assures stakeholders it is not filing for bankruptcy
The airline expects its recovery to take until at least 2020/2021
SAA has assured creditors, suppliers and its travelling customers that it is not bankrupt and that its turnaround strategy is already bearing fruit.
In a statement released on Wednesday, airline spokesperson Tlali Tlali emphasised that the state-owned airline will not be filing for bankruptcy.
Concerns over the ability of SAA to continue operations have been prompted by its delay in finalising its annual financial statements for 2017/2018 and tabling them in parliament by the end of September as required by law. Public enterprises minister Pravin Gordhan has alerted the speaker of the National Assembly, Baleka Mbete, that this will not happen.
Delays in tabling financial statements are often due to concerns raised by the auditor-general over whether an entity is a going concern.
The Treasury this week reported it has increased its impairment provision on SAA to R23bn, from R13bn in the previous financial year. SAA is expected to make a R5.7bn loss in the 2017/2018 financial year and to continue making net losses for the next two years.
In total contrast, privately run Comair, which is one of many competitors to SAA, last week reported the highest after-tax profit of its history.
SAA already relies on R19.1bn in state guarantees to continue in business and says it needs R21.7bn over the next three years in order to implement its turnaround strategy and eventually establish itself on a sound financial footing.
"We have always maintained that it will take us until financial year-end 2020/2021 to break even," Tlali said. "This means that our costs for a while will remain higher than our revenue until we reach a break-even point.
"We are aggressively implementing our strategy to drive down costs and improve revenue as part of transforming the airline. Our efforts are now starting to show results and the airline’s quarter one performance shows a significantly improved performance based on the targets we must reach.
"SAA is encouraged by the results of its quarter one performance. The results show that the airline is on track with its turnaround strategy and that the company is ahead of its plan based on its trading performance," said Tlali.
"This quarter one performance injects a new sense of confidence amongst all at SAA. The airline would also like to clarify that it will continue to honour its obligations to all its travelling customers, its suppliers and other creditors.
"This means that SAA is not bankrupt and will not file for bankruptcy," Tlali said.
SAA is one of a number of state-owned enterprises that are desperate for further bailouts from government.
At the end of the 2017/2018 fiscal year, total government guarantees to state-owned entities amounted to R432bn, with electricity utility Eskom claiming R221bn, more than half the total. Finance minister Nhlanhla Nene is expected to provide more detail on assistance to entities like SAA and Denel in his medium-term budget policy statement at the end of October.