South African Airways has revealed that it is expecting to double its loss for the 2016/17 financial year from a previously budgeted R1.7 billion to R3.5 billion.
The company made the revelation in a reply to the standing committee on finance, News24 reported.
“The budgeted loss for 2016/17 was set at R 1.7 billion but the revised forecast refers to an expected loss of R3.5 billion,” the board said.
“The company will be focused on growing its revenues and to continue to apply cost compression initiatives,” it added. “It operates in a very competitive industry and the company is aware of the risks from external factors to its business and the airline industry.”
According to the DA, the loss represents a real cash loss, as it does not contain the R1.9 billion impairment made in relation to the Airbus deal that contributed to the R4.9 billion loss in 2014/15.
The party questioned whether or not the previous forecast of R1.7 billion was played down to make it appear as if SAA and its chairperson, Dudu Myeni were making progress.
SAA will undoubtedly run out of cash again, the DA said, and will be back with the “begging bowl” for another government handout.
Global ratings firm S&P Global this week warned that South African SOEs like SAA were putting massive strain on the economy, and continued bailouts will ultimately push the country’s sovereign debt below investment grade.