Johannesburg - The National Treasury has described the guarantee of R13 billion it gave to SAA as material impairment.
The Treasury said the impairment value was the same as the previous year “due to financial difficulties experienced by SAA. However, the present value of the expected future cash flows was calculated at R18.8bn.”
“The impairment is limited to the total value of the investment,” the Treasury said.
The Treasury said the airline had made progress in some areas in its turnaround plan, which was presented in Parliament in 2014 by the previous board. It said there were some areas of improvements in the turnaround strategy of the airline.
SAA is expected to table its final results in Parliament today after presenting its interim results two weeks ago. The final results have been approved by the new board.
In his comments on the report, auditor-general Kimi Makwetu also noted the guarantee as material impairments.
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“As disclosed in note 12 to the financial statements, material impairments of some R13bn were recognised in the accounts as a result of investment in SAA,” Makwetu said.
However, SA Express (SAX) has indicated that it cannot guarantee its solvency for the year ahead after Public Enterprises Minister Lynne Brown asked Parliament to delay the tabling of its results.
The SAX results were expected to be tabled with those of SAA after President Jacob Zuma announced during his State of the Nation address in February that the two entities would be merged to cut costs and strengthen the balance sheet of the airlines.
Deputy President Cyril Ramaphosa also said a few weeks ago that the plans to merge SAA and SAX were progressing well.
In her letter to Parliament yesterday, Brown said SAX was unable to table its results because of solvency issues.
Today is the deadline for all departments and state-owned entities to table their annual reports with audited financial statements in Parliament. But SAX will do so in the next few months after the issue of its solvency has been resolved.
Going concern basis
“In terms of the Companies Act, SAX is required to demonstrate its ability to continue operating on a going concern basis for a period of at least 12 months after the signing of the annual financial statements by satisfying the solvency and liquidity test set out in section 4 of the Companies Act,” Brown said.
“SAX has yet to satisfactorily demonstrate such ability to the auditor-general. As a result the audit cannot be completed in order to finalise the 2015/16 annual financial statements.”
She did not indicate on the possible date for the tabling of the SAX financials in Parliament.
In its annual report the Treasury said the turnaround strategy of SAA was being implemented by the airline.
It said the rationalisation of staff, which started in April last year, had been concluded with 242 staff members taking severance packages at SAA and SAA Technical.
The process had led to the savings of R134.4m against the target of R181m.
BUSINESS REPORT