South African Airways (SAA) airbus A340. Picture: iStock
Facing a barrage of questions from MPs serving on the standing committee on public accounts (Scopa) concerning the financial and operational status of state-owned enterprises (SOEs), transport minister Barbara Creecy yesterday said the “debt-free” SA Airways (SAA) required a capital injection through an equity partner to get back to its former glory.
Assuring MPs that the airline would not be privatised, Creecy said government would be open to a model allowing for development financial institutions taking an equity stake in SAA – similar to the Public Investment Corporation having invested in Airports Company South Africa.
Despite MPs pushing for SAA’s liquidity to be presented through audited financial statements, board chair Derek Hanekom and chair of the audit, risk and governance committee Fathima Gany promised to table the documents by next year.
“When we went in to serve on the SAA board 17 months ago, there was a serious backlog in the submission of audited financial statements.
“We have completed 2022-23 and we are waiting for our AGM [annual meeting] before they can be made public.
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“The 2023-24 statement will be audited by February 2025,” said Hanekom.
Said Gany: “Before SAA went into business rescue, those statements were not audited by 2018, due to the going concern status.
“When we came in, we had a backlog of audited statements, which we had to work through.”
Creecy said she understood why MPs were concerned about the absence of audited statements.
She said it would be “proof that we are not in debt”.
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Creecy said the airline also required a loan facility “so that we can deal with black swan events, if there were to be a freak bird strike or a shutdown – due to a pandemic”.
On skills which left the SAA when it was placed under business rescue, Creecy said: “I am not in support of generalised severance agreements.
“If an organisation decides to have voluntary severance agreements, there must be categories of workers who are not included in those agreements, because it is very important to maintain skills.
“The staff of SAA was cut by 75%, with the business rescue practitioners having been merciless. We want to avoid a situation where a state-owned entity goes into business rescue again.”
Reflecting on what happened to Mango, SAA’s low-cost subsidiary, Hanekom said: “One has to understand that it did not just go under business rescue for the sake of it – it crumbled.
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“It may have been providing affordable flights for a period, but it was unsustainable and running at a serious loss.
“It is not for us to say whether Mango will come back to the market, because it is in the hands of the business rescue practitioner, who seems to be confident that there is a potential buyer.”
Hanekom said over the years, “the domestic market has become highly competitive, which is a good thing on the pricing side”.
“We have a number of airlines in the domestic market and SAA is in the process of recovery and emerging.
“Where SAA has an advantage is in the kind of aircraft we have and the branding – now doing well on the regional and intercontinental flights,” he added.
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