PARLIAMENT has ordered
SAA to table its overdue
2014/15 annual financial
report on January 15,
present a progress
report by December 15
and explain at a full-day
parliamentary grilling early
next year what progress
has been made with its
long-term turnaround
strategy.
Minister Jonas, told
a joint sitting of the
Standing Committees
on Finance and Public
Enterprises that Treasury
would decide in the next
few weeks whether to
provide a further R4bn to
R5bn guarantees to SAA,
which the airline needed
to finalise its 2014/15
books as a going concern.
The matter was being
delayed by the proposed
renegotiation of an Airbus
aircraft contract (see TNW
Nov 25). At the time of
publication, the application
was still being assessed
by Treasury’s fiscal and
liabilities committees. They
are looking at the legal
and financial implications
of changing the contract
with Airbus. A warning
about this is contained in
an internal memorandum
by SAA executives to the
board, but the media have
been interdicted from
publishing this.
Government granted SAA
a R6,5bn going concern
guarantee in December
last year. SAA’s total debt
raised with the support
of State guarantees now
stands at R11,4bn. He
said SAA also raised
a request for proposal
(RFP) for an additional
R15bn to consolidate
all its existing debt
and raise more working
capital. The airline was
also seeking unsecured
bridging financing to meet
its liquidity requirements
while finalising the RFP.
According to Treasury,
SAA has made a nett loss
of R648m for the year to
September 2015. Revenue
for the first six months
was 13,4% below budget
due to poor passenger
revenues on international
and regional routes. SAA
blamed the economic
downturn, competitor
airlines threatening its
market share and the
negative impact of the new
immigration regulations,
which cost it R550m in the
current year because of a
41% drop in children flying.
The estimated loss due
to the unabridged birth
certificate requirement
alone had been R574m
per year before it was
overhauled.
Operating costs were 7%
below budget, resulting in
a R363m saving, thanks
to lower fuel prices (offset
by the weak rand) and cost
controls. These included
484 staff cuts (from
8 747 to 8 263) and a
freeze on new positions
with only crucial vacancies
being filled. An internal
moratorium was in place
on all non-critical capital
expenditure.
According to SAA’s
corporate plan, the airline
will be profitable at an
operating level in three
years and fully profitable in
five years.
Parliament tightens screws
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