JOHANNESBURG - National airline SAA is in a much deeper financial crisis than previously thought, with Auditor-General Kimi Makwetu reporting that it had suffered losses to the tune of R5.5billion last year - much higher than the R1.47bn it reported in 2016.
Makwetu said yesterday that the history of the losses, lack of working capital and volatility in foreign exchange controls, created material uncertainty on the company’s ability to continue as a going concern.
He gave SAA a qualified audit opinion, meaning he could also not find some of the records of the assets of the airline.
He said the airline’s liabilities exceeded its assets by R17.8bn - up from R12.3bn in 2015/16.
“As noted in note 50, six consecutive years of operating losses have further eroded the capital base, and this continues to impact on the entity’s ability to operate in a highly demanding and competitive environment,” Makwetu said.
The results of the airline were tabled in Parliament yesterday after they were delayed by former minister of finance Malusi Gigaba in September.
Gigaba had asked for a postponement until January 28, but he asked for another extension from Speaker Baleka Mbete until April.
The latest loss was the sixth in a row by the embattled airline.
SAA was in trouble with the lenders who last year demanded changes to the airline before extending the loans.
Talks have been going on to merge SAA with SA Express and Mango to strengthen their balance sheet.
Baines & Company completed a report on its study for the merger of the airlines.
Makwetu said the lack of documents made it difficult for him to confirm the veracity of the assets and the inventory.
He said maintenance costs were understated by R282million, trade and other payables were understated by R226m, provisions were understated by R135m and trade and other receivables were understated by R148m.
He said there were no records for irregular, fruitless and wasteful expenditure.
Many deficiencies
Makwetu said there were many deficiencies in SAA finances.
His report found that SAA did not maintain records of irregular, fruitless and wasteful expenditure.
Makwetu did not get the records of these transactions and assets and could not express an opinion.
“The government has made guarantees available and, subsequent to year end, as disclosed in note 49, recapitalisation funds to the extent of R10bn for utilisation by SAA,” said Makwetu.
“The history of losses, lack of capital and volatility in foreign exchange rates, along with maturing loans and working capital deficiencies, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern,” added the auditor-general.