SABC News - SAA appears before the oversight committee on finance:Wednesday 17 May 2017

SAA appears before the oversight committee on finance

Wednesday 17 May 2017 19:39

SABC

The airline says since the appointment of a full board and a R4.7 million government guarantee last year, there are some improvements in its finances.

The airline says since the appointment of a full board and a R4.7 million government guarantee last year, there are some improvements in its finances.(SABC)

South Africa Airways (SAA) has told Parliament's oversight committee on Finance that it is relying on lenders to survive. The airline was presenting its corporate plan, quarterly report to the committee.

Over the years, SAA has accumulated more than R19 billion on guarantees.

South Africa Airways says its financial losses from the year 2011 to 2016, run into billions of rand, impacting heavily on its balance sheet.

The airline says since the appointment of a full board and a R4.7 million government guarantee last year, there are some improvements in its finances. Acting CEO Musa Zwane says SAA is relying on lenders to meet its financial obligations.

“The impact of the loses that I have shown you in the previous graph, Chair, they have eroded the airline's capital base and threaten its growing concern on a sustainable basis. Consequently, what we are finding in the airline in our days is that we are relying on lenders to finance our working capital requirements and that is not a good place to be.”

The airline's financial rescue plan includes the merger of SA Express and SAA, the recapitalisation of SAA and finding an equity partner.

The plan is yet to be finalised. Board Chairperson Dudu Myeni says they are now aware of their weaknesses and will work on them.

“The cost of doing business at SAA is too high and we've had an opportunity to be able to analyse that. I agree with you that we can't rely on guarantees and also on lenders because lenders end up giving you conditions.”

The airline says currently its cash burn rate is about R250-million a month.

CFO Phumeza Nhantsi says their quarterly report up to March in 2017 indicates continued financial losses.

"SAA for 2016-2017 financial year end earnings before interest tax and depreciation the company has posted a loss of R1.6 billion. This is compared to a loss of last year of R523 million at an overall level which is the bottom line; not loss before or after tax, the company has posted a loss of R4.7 billion compared to loss last year of R1.5 million.”

Meanwhile, Finance Deputy Minister Sifiso Buthelezi says they are seeking a political intervention to recover SAA's more than a billion rand trapped in some African countries.

Buthelezi says the money can help the financially struggling airline with cash flow.

“We have cash of about R1.05 billion in today's exchange rate trapped on many countries which we can repatriate to SA. Among those countries like Angola, Senegal, Nigeria and Zimbabwe, there's that money which is trapped there, which affects the cash flow of the company.”

The committee expressed its satisfaction that there seemed to be better management direction emerging from SAA.

The next meeting will be in a month's time.

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