Losses at another state-owned airline, SA Express, widened significantly over the past financial year despite the efforts of a new board and management to turn the airline around.
Like SAA, SA Express has not tabled financial statements in parliament for the past two years. But the 2018/2019 annual report, which Business Day has seen, shows that the company recorded a loss of R591m, more than three times the previous year’s R162m loss.
Interim CEO Siza Mzimela, who was appointed in August 2018, had hoped that the company would break even by April 2019 and would not require additional state support. A new board was appointed in May 2018.
However, the day after the board took office, the airline was grounded by the SA Civil Aviation Authority for three months for not being airworthy.
Still solvent?
The auditor-general was unable to express an opinion on the accounts, says the report. This resulted in a disclaimer of opinion. While the balance sheet shows that the value of assets exceeded liabilities and the accounts are prepared on a going-concern basis, the auditor-general said that due to
the renegotiation of certain liabilities he was unable to confirm the "adequacy of management’s use of the going-concern basis
of accounting".
In reply to questions on Thursday, SA Express spokesperson Mpho Majatladi disputed that SA Express was not a going concern, and said that the directors were satisfied that the company was solvent.
"The accounts do not show that SA Express is not a going concern. In fact, they show that the company is solvent," said Majatladi.
"According to the balance sheet, assets exceed liabilities by R426m. The board of directors regularly reviews the going-concern status, and acts accordingly," she said.
Majatladi said that the three-month grounding had made it a difficult year for SA Express.
"However, a new board and a new management team has progressively been appointed since then. They have worked tirelessly, first to end the grounding and then to return the airline to sustainability," she said.
In October, SA Express was authorised by the Air Services Licensing Council to fly three new regional routes between Cape Town and Gaborone in Botswana; OR Tambo and Bulawayo in Zimbabwe; and three return flights to Luanda in Angola.
Rival airline SA Airlink has objected to the granting of these routes on the grounds that SA Express has not tabled its audited financial statements.
A spokesperson for the council said that it had rejected Airlink’s complaint.
Airlink has since served papers on the council, indicating that it intends to take the decision on a judicial review.
The council said on Thursday that it would defend its decision vigorously as "the audited financial statements is a not the only requirement for granting of routes, but the safety and reliability to operate a safe and reliable operations as well as the statement of accounts".
The government has hinted that it intends to consolidate its
airline businesses into one, but so far has not acted on this intention.
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