Johannesburg - South African Airways was ordered by the government to appoint turnaround specialists and complete overdue financial statements in a quest to return the state-owned airline to profitability.
Finance Minister Nhlanhla Nene and Public Enterprises Minister Lynne Brown met with the SAA board, according to a statement from the government.
They stressed the need for the airline to be financially sustainable without support from the Treasury.
SAA must “appoint turnaround specialists as soon as possible to set the airline on the path to profitability,” the Department of Public Enterprises said.
The Johannesburg-based carrier needs to “move rapidly to a position in which they could live off their balance sheets.”
SAA is now “technically bankrupt” and surviving off state-guaranteed loans because Nene turned down applications for government grants, Brown said last month.
The Treasury wants state-owned companies to survive on their own cash resources and not rely on the state for funding.
Chief executive Monwabisi Kalawe is on special leave for “personal and professional reasons,” SAA said November 7.
Nico Bezuidenhout, chief executive of low-cost unit Mango Airlines, will lead the carrier in his absence.
Brown accepted the resignations of six other directors last month and appointed two new ones as part of a boardroom clearout.
“There are several consequential procedural matters that are being dealt with between the board and the chief executive and it will be inappropriate for me to comment until these have been concluded,” Brown said today.
SAA has yet to publish earnings for the 12 months ended March 2014 and it can’t afford replacements for an aging fleet of long-haul aircraft.
The airline flies five unprofitable international routes, Brown said today in a written reply to a parliamentary question. - Bloomberg News