Business 13.9.2016 07:35 pm

Gordhan confirms SAA losses

Finance Minister Pravin Gordhan. File Picture: Refilwe Modise

Finance Minister Pravin Gordhan. File Picture: Refilwe Modise

For the year 2014/15 where the annual financial statements are about to be concluded, there was a loss of R4.7bn.

Finance Minister Pravin Gordhan on Tuesday confirmed that South African Airlines suffered losses of R4.7 billion in 2014/15 and a further R1.8 billion in the past financial year.

Gordhan did so when he closed a bitter debate in the National Assembly on SAA that was dominated by demands from the opposition for SAA chairperson Dudu Myeni to be removed from the post to which she has been re-appointed for a year.

“I think we owe it to the South African public that we be honest and frank and truthful about the financial status of the airline. For the year 2014-15 where the annual financial statements are about to be concluded – it is correct, there was a loss of R4.7 billion.

“And for 15-16, according to the numbers I have, R1.8 billion rands.”

Gordhan said the opposition was not only correct in stating that SAA held government-guaranteed loans of R19 million but also that later in the year and early in next year, eight to ten banks would call in up to R5 billion in payment from the airline.

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Should SAA call for some of those dues to be rolled over, the banks as well as National Treasury would ask to see evidence that it was righting itself and would be able to meet further commitments.

National Treasury has urged the board to appoint competent managers and to allow them to manage without interference and to stop moving the goal posts for a return to financial stability, which most recently it has said would take another five years. It must also review all suspensions to see whether these were justified.

“This date has been moving with each corporate plan and the board must take responsibility for setting a clear target date,” Gordhan said.

He also conceded that SAA would collapse without government guarantees but said letting that happen was not an option. The airline’s long-overdue financial results are due to be tabled this week after another of R4.7 billion was granted to allow it to maintain going-concern status. Gordhan stressed that this came with “conditions”, notably that financial stability and credibility are actively pursued to reassure ratings agencies and investors.

“If we remove government guarantees technically SAA would be insolvent but it is a public asset and we can’t allow a public asset to go to ground.”

During the debate, the Democratic Alliance said it would pursue a court challenge to Myeni’s continued tenure and the Economic Freedom Fighters said she could not be trusted because of her close ties with President Jacob Zuma, who they demanded resign.

EFF leader Julius Malema implored government to support Gordhan in widely perceived tug-of-war between the presidency and the treasury.

“Defend this minister of finance. This is the only thing we have in this country,” Malema said.

“If you can’t listen to this man, this country will collapse. This criminal which is sitting here is troubling this man. If you are not going to defend the minister of finance and you defend a criminal you must know there will be no country left,” he shouted, ignoring warnings that he was exceeding his alotted speaking time in the debate in the National Assembly.

“You must remove Honourable Zuma from power,” he concluded.

Earlier, the EFF refused to listen to Zuma’s quarterly question-and-answer session in the National Assembly, during which the president defended Myeni.

He said many board chairs had battled to turn the airline around, and tried to counter the perception that he was behind her re-appointment, noting that he was not at the Cabinet meeting last month that appointed the new board.

– African News Agency (ANA)

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