Registered users can save articles to their personal articles list. Login here or sign up here

SAA seeks urgent funding after latest loss

The airline reported a net loss of R5.7 billion in the year through March, the worst since 2015.

South African Airways said executives will meet National Treasury officials every two weeks to address urgent funding needs after the embattled national airline reported a seventh consecutive year of losses — and the worst since 2015.

The carrier’s precarious balance sheet is among the most urgent tasks on the to-do list of Finance Minister Nhlanhla Nene, who is already under pressure to revive the country’s own stretched finances. SAA chief executive officer Vuyani Jarana said last month the airline needs R5 billion immediately, while looming debt payments next year may necessitate further government assistance.

Read: SAA says it needs capital injection ‘now’

A so-called oversight forum has been set up between SAA and the Treasury that will also address the airline’s ownership structure, the carrier said in a written copy of presentation to lawmakers distributed on Wednesday. Interim chief financial officer Bob Head is working to properly value assets including aircraft, property and equipment, a task he’s expected to complete this month, while an analysis of irregular expenditure under previous management including suspended CFO Phumeza Nhantsi should be completed by September.

Merging airlines

SAA said it plans to break even by 2021. It’s transferred aircraft to low-cost unit Mango to reduce capacity, cut back on routes to London and some West African destinations, and started talks with pilots and other workers to boost productivity. The government is exploring a plan to merge SAA with Mango and SA Express, public enterprises minister Pravin Gordhan said Tuesday. The smaller SA Express is “on the verge of collapse,” lawmakers said Wednesday.

The airline reported a net loss of R5.7 billion in the year through March, more than double what it had budgeted, after carrying fewer passengers and incurring exchange-rate losses as the rand gained against the dollar. The fourth-quarter was particularly damaging, with revenue falling 12% short of SAA’s expectations.

Read: SAA: Don’t bother with business rescue

The full-year figure compared with R5.6 billion in fiscal 2017, and R6.1 billion three years ago.

© 2018 Bloomberg L.P

COMMENTS   17

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Jusqu’à ce que nous mangeons de nouveau, mon amour – trouvez-vous un autre compte lié par Gupta pour auditer!

The ANC’s track record for managing even the most rudimentary activities is not impressive. ANC minister Thandi Modise did not realize that the livestock on her farm will die if she does not provide them with food and water. The Defense Force under ANC rule killed 25 horses in Potchefstroom through sheer incompetence and negligence. The Life-Isedimeni disaster illustrated the level of criminal negligence and incompetence of ANC ministers and cadres. The people of North West are protesting against the criminality, incompetence and corruption of ANC politicians.

Eskom proves that the ANC can’t even run a business that enjoys a state-sponsored monopoly successfully. What are the chances of SAA surviving under ANC rule? This idea of a “developmental mandate” is in reality only a license to loot.

“What are the chances of SAA surviving under ANC rule”?

What are the chances of SA surviving under ANC rule.

I’d say, about the same.

Sensei, these people can’t think or have any foresight. For instance a simple but senseless act like closing the Embassy in Israel. By implication they should then also close the Embassy in USA,right? They don’t seem to realize that Trump will do that for them and not even blink an eye.

OK, I’ll reiterate: only in SA do we strive to reward the incompetent, lauder the corrupt, pander to the inept, support the unable and promote the thieves. And tomorrow we will do so again with vigor!

The Government is happy to flush billions down the toilet on a business we have don’t the skills to manage profitably. A national carrier for-the-sake-of-it makes no sense. It is obvious to me. All it means is that fiscal ‘day zero’, the day the money runs out, is that much closer.

I admire the selectivity of Moneyweb when it comes to posting my comments … all too often they never appear … must be because I usually combine the words “corruption, ineptitude, inability and fraud” together … let’s see if this one makes it past the mods….

Aah yes, thought so, this one posted in 0.25 seconds ….wow!

No, no, no! Rather seek voluntary liquidation and focus the money to be spent on education – quality education and training that is. That will set the true radical economic transformation under way. Alas, this thinking does not fit with the socialist/ communist ideologies of the ruling elite who are more focussed on looting for their party’s and own benefit.

I hate to advocate for ‘privitization’ of what is supposed to be a ‘public good’ for the profit and benefit of the few. But I will readily admit that the South African state has faile dismally to either manage and or supervise this asset properly. I have, after observations over two decades now, seen how it has been a conduit for syphoning funds out of the State and out of potential services for the poor. Leaving us only with two options, (a) the state place the entity in the capable hands of qualified managers or a subcontractor with strict guidance to run SAA as a corporation rather than a charity that receives alms from the state as its main donor year in year out, (b) privatize the asset and retain a non-controlling minority stake earning dividends and royalties. It won’t even help to advise them to look at the success of Ethiopian Airlines. That’s how you expand and continue successful improvements. SAA is a lost cause…toss it!!!

I can’t understand how they could keep losing so much money, while other airlines in SA are actually profitable. Do they literally stand there and dump buckets of cash down the drain, or set it on fire?
No one can be that inept, the only logical explanation then is that the money is being stolen.
No private sector business could year after year lose R billions and remain in business, and then demand that taxpayers keep filling their private ATM year after year. No business in their right mind would buy SAA with it’s huge debt overhang, so just shut the damn thing already, and put our money to better use.
I saw a report that said that 16 000 schools in SA still do not have proper toilets, R5 billion divided by 160000 gives R312 500 each, that should be enough to build toilets for all of them.

Stop the madness!!!!
Time to pull the plug. SAA is useless anyhow.

It really gets up my nose that this gets called “government assistance” It is not. It is taxpayer assistance. Government has no money and makes no money. It uses ours.

Also why do we call Government “the shareholder” It is not. The shareholders are the citizens of this country whom Government represents. We the people own all SOE’s.

Moneyweb please stop using such terms as “Government assistance”. Please refer to things as what they actually are. Also please stop referring to the ANC as the “ruling party”. They are the “governing party”. We are ruled by laws which are enforced by the courts.

One of the things I learned when I was recently nosing around about how this happens, some guy that I was discussing an unrelated business with, informed me that he was traveling to Zimbabwe on SAA, and the ticket price he quoted me was just ridiculous, because he price was cheaper than mine on Ethiopian to Malawi. On average Ethiopian is generally cheaper than most on most routes! When I asked him how he managed that, he said that there were agents who had this bulk of special priveleges tickets that they can almost literally give away. In this case it was his girlfriend. Well, I figured this is anecdotal it is not even worth getting mad about, for I could the anger well up. Then I was recently flying out to Kenya, and I happened to chat with someone flying to Lagos, who was not able to get on the SAA flight there, so they were routing via Kenya, so that they can attend their late mother’s funeral (janaaza was that same day – the funeral that is). The person was upset because the cheap ticket promise to them for R4500 was sold on when she was unable to come up with that money in time. The person who had arranged for the ticket in SA from Lagos called and was mighty upset when the woman indicated that she was not able to raise the funds on time and was likely to be late for the arrival as she was now routing through Kenya on a more expensive flight. This story told me that SAA is literally paying people to fly on it and they don’t seem to be in a hurry to solve the problem or to sort it out because their own staff are involved or implicated. You remember when they used to be almost the courier of drugs when staff after staff got caught in the west? Those same elements have changed the business model, not the business of fleecing SAA and SA by extension.

Let the carrier die on the vine. All this inept government funding has unfairly treated the airline industries competitors.

Hellooooo….anybody home at the PIC? There’s a customer waiting at your front door!

Load All 17 Comments
End of comments.

LATEST CURRENCIES  

ZAR / USD
ZAR / GBP
ZAR / Euro

Podcasts

GO TO SHOP CART

Follow us:

Search Articles:Advanced Search
Click a Company:
server: 172.17.0.2