South African Airways has reportedly improved its cash position – but continues to burn through money, having posted a R1.38 billion loss in the first quarter of the 2015/16 financial year.
A quarterly report, seen by Business Day, showed that despite the loss, SAA was in a stronger cash position, having narrowed costs through cutting routes and retrenching employees.
The report has not been published publicly, and is the first financial information that has leaked out about the company in 18 months, according to BDLive.
SAA is yet to publish its financial results for 2014/15, having missed several deadlines and having the release pushed back to September 2015 – but it is expected to post another multi-billion rand loss.
The airline has been making a loss since 2012, with the last available results, from 2013/14 showing the group post a loss of R2.55 billion. The losses for the past two years have not been made public.
SAA has received a number of government bailouts worth at least R14.4 billion as part of its turnaround strategy, but finance minister, Pravin Gordhan warned in January the carrier cannot become a liability on the fiscus.
SAA has been marred by allegations of corruption and mismanagement, where chairperson, Dudu Myeni, has been accused of running the company into the ground financially by seeking to enrich connected third party companies at the airline’s expense.
Myeni’s management of SAA – which should not be her task as chairperson of the SAA board – has created an apparent feud between the airline and National Treasury.
SAA needs going-concern guarantees from government to settle its debts for the 2014/15 financial year to the tune of R5 billion (and likely more for the 2015/16 financial year) – however, Gordhan has made it clear that the airline will not get any money from Treasury until a new board has been put in place.
Myeni, who is a friend of president Jacob Zuma, responded by saying that SAA will function without government’s money, refusing to give up power. The president for his part said he would get personally involved in SAA’s affairs to resolve the stalemate between the board and Treasury.
Gorhan’s sentiments toward SAA and the board echo that of former finance minister Nhlanhla Nene. It was speculated at the time of his firing that his refusal to give money to Myeni and SAA – as well as other ‘connected’ SOEs – ultimately led to him being axed.