Is SAA seeking more tax money?

South African Airways (SAA) may once again be passing its begging bowl to government as it looks to raise capital by using government guarantees as backing.

But this will not be as easy as it was in the past because there’s a new sheriff in town at the Standing Committee on Public Accounts (Scopa).

He is Rise Mzansi leader Songezo Zibi, who has promised to get tough on delinquent state-owned enterprises (SOEs).

Zibi threatened last week to subpoeana any SOE that had not submitted up-to-date accounts to the auditor-general.

SAA: Delayed financial statements and failed Takatso transaction

SAA’s financial statements are more than five years overdue.

It needs to raise money to reboot itself after the failed Takatso transaction which would have provided up to R3 billion in working capital for the airline.

To date, a seeming lack in interest from other suitors is adding to its challenges.

Govt support for alternative sources of funding

Litha Mpondwana, spokesperson for Minister of Planning, Evaluation and Monitoring Maropene Ramokgopa, said the department supported SAA in seeking alternative sources of funding.

“Government fully supports the SAA board and management in their pursuit of alternative sources of funding. Government is confident in the board’s strategy and believes these efforts will ensure a prosperous future, enabling SAA to contribute positively to the national economy through its provision of air transportation for passenger and cargo.”

Meanwhile, interim SAA boss Prof John Lamola told Bloomberg that the debt funding would likely need sovereign guarantees over the next three years.

He cited expansion as the reason for the funding and affirmed that the airline was not seeking bailouts given that it is cash-positive.

Yet the company’s financials remain delayed and various reports over the past 18 months indicate substantial losses close to R800 million.

‘All very worrying’ – Outa

Wayne Duvenage of the Organisation Undoing Tax Abuse (Outa) said he “finds it all very worrying”.

“In January 2023, Pravin Gordhan [former public enterprises minister] told parliament that SAA had become profitable even though he could not provide financial statements for the airline at that stage.

“Clearly, SAA is not profitable if it now requires loan financing and is still unable to produce its financials for the past two years,” he said.

Duvenage also questioned the debt funding strategy.

“Who on earth will provide SAA with debt financing under the current circumstances with no strategic equity partner in sight and its likely current loss-making situation? There is no doubt the airline is in financial distress and will probably require another bailout, despite government saying this will not happen.”

Duvenage said Outa repeats its call for government “to be serious about this failing state-owned company and to sell it off or dissolve the airline once and for all”.

Strategic equity partner the answer for SAA?

The DA’s Darren Bergman said the party’s position remains that a strategic equity partner is the way to go with SAA.

“I understand the minister’s application for debt funding because, at this stage, SAA’s growth is based on more routes, but limited planes.

“The best deal for the taxpayer is for SAA to get its strategic equity partner before acquiring debt funding, which I think can happen if the current financial forecasts are to be believed. I would encourage the minister to use her time and energy in finding a new equity partner rather than begging for debt funding,” he said.

Mpondwana said SAA had issued a statement in which it put into context the matter pertaining to the release of its audited financial statements.

“SAA is engaging with the auditor-general to finalise the audits. Once they are finalised, SAA will release the results. Currently, SAA is debt-free and holds a robust, unencumbered property portfolio,” he said.

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