SAA needs R3.5 billion by March, says interim CFO

The interim chief financial officer of SAA, Deon Fredericks, has told Parliament that the embattled national carrier has a procurement requirement of R3.5-billion for the next four months, and needs to find the money.

Fredericks was part of a delegation that briefed the portfolio committee on public enterprises on Tuesday morning to provide an update on the national carrier’s turnaround strategy.

SAA has been working closely with National Treasury and the department of public enterprises to steer itself to profitability.

The national carrier received R4.8-billion in a government guarantee last year, and opposition MPs are concerned that the trend is not showing any signs of letting up. The R5-billion it received from National Treasury during the medium term budget policy statement was intended to repay debt.

In a frank account of the entity’s finances, Fredericks told the portfolio committee that while SAA had received the R5-billion recapitalisation from National Treasury, this would go towards paying a bridging finance debt of the same amount.

He said the company would need more than R3.5-billion to continue procuring as expected by the end of March 2019. He did not specify what needs to be procured.

“We are looking at a R3.5-billion case flow requirement by March of 2019. We have received R5-billin recapitalisation and that will go straight towards paying finance facilities,” said Fredericks.

READ MORE: Broke SAA goes on spending spree

Fredericks said the group expects to incur losses of R5.2-billion in the 2018-19 financial year and R1.9-billion in the 2019-20 financial year, after reporting a net loss of R5.7-billion in the 2017-18 financial year.

“We hope for a better outcome in our spending on fuel. Profit lost before tax projection is a R5.2-billion loss. With possible changes in fuel prices and some of the changes we are putting in place, we hope to change this and make the overall figure lower than this,” Fredericks said.

Fredericks pleaded with MPs and the media to be careful in their remarks when holding the national carrier accountable, saying reckless statements could have a significant impact on the company’s reputation and, by extension, its ability to draw in clients and funding.

“We will need shareholder support to take these requirements up. Any negative remarks on SAA from any quarter has a significant impact on SAA financially. Agents look at these and redirect their bookings. Anything like that has to do with trust,” Fredericks said.

READ MORE: Bailouts allow state capture to continue

SAA CEO Vuyani Jarana said procurement contract defects are one of the key challenges the national carrier is targeting to improve its finances in line with the company’s turnaround strategy. — Fin 24

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Khulekani Magubane
Khulekani Magubane

Khulekani Magubane is a senior financial reporter for Fin24. 

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