(ON)GOING CONCERN
SAA’s historical mess of financial losses, broken airline operations finally revealed
Since 2018, SAA has pencilled in financial losses of R28.9-billion while in the same period the airline received R38.1-billion in bailouts from the government. In other words, billions of taxpayer funds went into a black hole.
SAA last turned a profit in 2011 and since then the state-owned airline has been racking up financial losses while depending on billions in taxpayer-funded bailouts to survive.
SAA’s dire financial position has now been confirmed by its financial results for four consecutive years (2019 to 2022), which were tabled in Parliament on 14 December after the airline failed to consistently do so for many years. It last tabled financial results in 2018, making its financial position a mystery, even though the many bailouts painted a picture of an airline in dire straits.
Since 2018, SAA has racked up financial losses worth R28.9-billion while over the same period it received bailouts worth R38.1-billion from the government. In other words, billions in taxpayer funds went into a black hole because, despite the financial support from the government, SAA has remained a mess. It was even placed in a business rescue process in December 2021. It exited that restructuring plan in April 2021.
Historical dysfunction
The four sets of financial results underscore a dysfunctional airline that was not financially stable and on the verge of collapse. SAA pencilled in a financial loss after tax of R5.48-billion in 2017/18, R6.48-billion in 2018/19, R5.73-billion in 2019/20, R7.63-billion in 2020/21 (a watershed moment as Covid lockdowns floored the global airline industry), and R3.65-billion in 2021/22. According to the Auditor-General’s report on SAA’s financial affairs, from 1 April 2018 to 3 April 2023, the government threw R38.1-billion at SAA, of which R27.6-billion was paid to the airline after it entered business rescue.
The recently tabled results show that leasing aircraft, the maintenance of aircraft, fuel and employee remuneration were the biggest expenses for SAA. During its 2021/22 financial year (the most recent report), it generated revenue of R2-billion, but employee remuneration costs came in at R2.5-billion, aircraft leases gobbled up R470-million, followed by fuel (R369-million) and aircraft maintenance (R323-million). SAA relied on debt (total liabilities, including loans, reached R9-billion in 2021/22) and government support to cover expenses that exceeded its revenue.
SAA turns a corner (apparently)
SAA submitted its financial statements for 2022/23 for auditing in October 2023 and this audit is still in progress. It is also not clear whether SAA has turned around its situation, from perennially recording financial losses to being profitable. However, Derek Hanekom, the interim board chair, who signed off the four sets of financial statements, told Parliament in November that the airline was showing “a modest profit at this stage and no loss is expected”.
“We will be cash-positive by the end of the financial year… SAA is not facing a danger of collapse without the [National] Treasury’s support.”
Hanekom added that the airline was no longer in debt and continued to trade as a going concern. The going concern test is one that companies must pass to secure a clean bill of health from their auditors.
A smaller SAA has emerged from business rescue, running a fleet of six planes (from more than 20) with a workforce of about 1,000 (from more than 5,000).
In 2021/2022 financial statements, SAA directors said the airline emerged from business rescue “as a company that was liquid and solvent”. They said that after exiting the process its assets of R8.9-billion exceeded its liabilities of R5.8-billion, resulting in positive equity of R3.1-billion.
While the Auditor-General agreed with Hanekom’s assessment of SAA as a going concern, saying it was “appropriate”, it warned that the airline’s status had “material uncertainties”.
The Auditor-General sees SAA’s “continued dependency” on funding from the government for its operations as a key risk to its “going concern” status. The airline “does not have an adequate record-keeping system”, which compromised its ability to produce accurate financial statements.
Read more in Daily Maverick: Auditor-General’s report reveals SAA is far from going like a Boeing
SAA is still in the throes of its ownership being restructured to allow private-sector investors to buy 51% of the airline from the government.
Read more in Daily Maverick: Privatisation of SAA passes crucial competition hurdles
Harith General Partners (an infrastructure company which owns Lanseria Airport in Gauteng) is leading a consortium called Takatso that plans to buy 51% of SAA, with the government retaining 49%. DM
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Good Almighty Lord!
Throwing my tax money on a bonfire.
Same result.
Quite sickening when you think of all those billions just disappearing down the toilet. Its unfair on the taxpayers and maybe they should be allowed to vote whether to keep SAA going or shut it down totally. What other business is allowed to get away with no financials for 5 years , that in itself makes the whole thing stink.
And comrade Dudu has ridden off into the sunset, tightly clutching her Gucci bag stuffed with her ill-gotten gains? ZERO consequences other than being declared a delinquent Director thanks to OUTA and the airline pilot’s association.
Bet she’s giggling at the mayhem and destruction of lives / families that she has caused, along with her mentor, shower head!
It makes me physically ill!
What did Gordon’s management of this fiasco cost us? SAA should have been shut down since when?
When Air Afrique went belly up in 2002, it had something like 15 aircraft and 5,000 staff. Comparisons were made with the then just expanding Ryan Air which had 30 aircraft and around 500 staff.
Of course it was not fair because Air Afrique was not just a state airline, but a multi-state airline so factions in all the contributing states had to have their relatives, party members and relatives of contributors given jobs.
Not at all like the factions in South Africa who all sought jobs for the people from sunny skies SAA…
What moral reason could the government have in keeping this business afloat?
Diplomatic bags
No moral reasons, however all the ‘privileged MPs, SOEs, etc’ packages will come to the light of day
It is just sickening that those responsible for the demise of SAA (and all other SOE’s) through gross corruption, nepotism and mismanagement like the odious Dudu Myeni’s, odious Zuma’s, odious Gigaba’s etc. of this world have gotten away scot-free and are enjoying the fruits of their rapacious thieving. All that tax payer money lost, squandered and stolen with zero consequences and total impunity. Just imagine what that money could do for education, health, infrastructure, policing etc. The vile and evil anc has been a rotten, cancerous and miserable failure that has all but raped this beautiful country of ours and left it a wasteland – like a swarm of locusts that devours all in its wake!
SAA was and is a dead duck. No way in hell I would ever use SAA, after hearing about their inability to fly to Brussels resulting in a nearly fatal accident.
Somebody isn’t telling the whole story.
It does raise the question of …can “dead ducks” fly ? BUT then … during xmas we can have a ‘resurrection’ of sorts, can’t we ?
And the common factor of all these stuff-ups, our dear comrade Pravin, merrily continues in his well paid job!
Democracy is failing SA hugely, with such fools pretending, and being allowed, to manage the national business.
How the mighty have fallen, from 75 Aircraft in 2006 to this!
When the delinquent, incompetent and unqualified were given the keys, what did we think would happen? Our voters never seem to learn and continue to allow the same people to make critical decisions on our behalf.
Please check the dates in the article, April 2021 is before December 2021
As long as we have lost our identity as children of God and have given dominion to everything on earth ,we are going nowhere until we realize that in every situation here in S.A. to be good we need to repent and seek God’s face for Divine intervention.
Or just follow some of the Ten Commandments like Thou Shall Not Steal. That’s a good place to start.
SAA is simply a mountain of crap disguised as a going concern. SA is in desperate trouble with massive unemployment and poverty. The medical and education systems are both in the dire straits , SAPS is effectively rudderless and loaded with crooks, all nicely protected and taken care of by the head crook Bheki Cele of Pretoria SAP premises (get rich quick) fame. All of this overseen by a gutless president who smiles benignly down on his flock of money grabbers in parliament while he spews useless platitudes at every opportunity but never allows press question-and-answer interviews. Not so stupid considering he’d be ripped to shreds by astute journo’s from the likes aof Daily Maverick and News 24. So, all that money pumped into SAA and nothing to show for it. Wonder where it all went?
Which makes me wonder how the “astute journo’s” of the US accept ‘stupid answers’ from the likes of Biden’s poodles (Kirby, blinkered Blinken, et al) at ‘press interviews’ since the start of the ‘war’ on Palestinians ? Also those of the astute kingdom of Sunak ?
Perhaps just a reminder: I didn’t see ‘astute journo’s (sic)’ of the US in the piece you responded to. BTW, it should be ‘journos’. Thank you.
Would you fly on an airline that is managed by the same company that manages Eskom, Denel, Prasa, Transnet, the Post Office, the Police and lastly: South Africa?
Business, Regional Politics.
Who on earth, in their right mind would want a 51% share of an ongoing disaster. This government’s only strength is in destroying everything they touch.
Your dates a bit messed up in there – how can they have exited business rescue in April 2021 if the only went into business rescue December 2021? Pretty sure they went into business rescue well before 2021, but the dates escape me.