SAA will remain under intense government oversight, Finance Minister Pravin Gordhan said in his report contained in National Treasury’s 2017 Budget Review, which he tabled in Parliament on Wednesday.
Referring to recommendations made by the Select and Standing Committees on Finance on the 2016 Revised Fiscal Framework, Gordhan said the committees recommend that National Treasury strengthen oversight over SAA and other state-owned entities to prevent defaults, return it to profitability and reduce pressure on the national fiscus and national debt.
“The committees will seek to exercise more effective oversight over SAA,” he said. “During this ‘business unusual’ period, SAA will remain under intense government oversight through weekly, monthly and quarterly meetings.”
Gordhan “stressed to the SAA board that urgent action is required for the airline to operate sustainably”.
“This includes the board reviewing and strengthening the airline’s strategy to accelerate the turnaround and to ensure its robustness in the context of increasing competition and volatility in the fuel price and exchange rates.”
Following the installation of a new board at SAA in September (which retained Dudu Myeni as its chairperson), Treasury granted the technically insolvent airline an additional going-concern guarantee of R4.7-billion, increasing its total guarantees to R19.1-billion.
SAA has used R3.5-billion of a R4.7-billion going-concern guarantee, with the remainder likely to be used in 2017-18. SAA pared its losses from R5.6bn in 2014-15 to R1.5-billion in 2015/16.
Gordhan tasked the board with a number of actions and these have been receiving urgent attention, he said.
“These activities included the finalisation of the annual financial statements for 2013/14 and 2014/15, both of which were concluded before the end of September 2016.
“SAA faces liquidity constraints in the short to medium term and government has been working closely with the board to address this, while working towards the long-term financial and commercial sustainability of the airline.
“With support from the National Treasury, SAA has secured funding to allow the board time to review and strengthen its turnaround plan, and take steps to stabilise the airline and return it to financial sustainability.
“The board is finalising the recruitment process for the chief executive officer and the chief financial officer positions so that recommendations can be submitted to the shareholder for consideration.” – Fin24