South Africa: SAA - a Moving Target As Cabinet Meets to Discuss Financial and Compliance Turmoil of National Carrier

A South African Airways Airbus landing at Munich Airport in 2015.
analysis

SAA and what to do with the insolvent national carrier is on the agenda of Tuesday's Cabinet meeting. Right now a course of action remains a moving target as political, financial and, yes, ideological, interests collide.

The easy, if unpalatable bit is the out of kilter SAA balance sheet. SAA Group, including technical and other subsidiaries like catering, recorded R5.42-billion losses in the financial year ending 31 March 2018. The national carrier is not a going concern, effectively it is insolvent as its liabilities exceed assets by some R13-billion, and it is kept in the air on the back of bailouts at taxpayers' expense.

That's according to documents the national airline submitted to Parliament's public spending watchdog, the Standing Committee on Public Accounts (Scopa). And from these documents it emerges that SAA, which accounted for R5.01-billion of the losses, spent R630-million on "data costs" and R1.497-billion on "accommodation and refreshments", or effectively just under half of the R3.14-billion spent on leasing aircraft.

Co-incidentally, the document also notes breaches of the Public Finance Management Act (PFMA), particularly in procurement, with "a plan of action has been put in place by the Group to mitigate the recurrence of PFMA contraventions... Additional discussions...

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