South African Airways Seeks Urgent Funding After Latest Loss
(Bloomberg) -- South African Airways said executives will meet National Treasury officials every two weeks to address urgent funding needs after the embattled national airline reported a seventh consecutive year of losses -- and the worst since 2015.
The carrier’s precarious balance sheet is among the most urgent tasks on the to-do list of Finance Minister Nhlanhla Nene, who is already under pressure to revive the country’s own stretched finances. SAA Chief Executive Officer Vuyani Jarana said last month the airline needs 5 billion rand ($401 million) immediately, while looming debt payments next year may require further government assistance.
A so-called oversight forum has been set up between SAA and the Treasury that will also address the airline’s ownership structure, the carrier said in a written copy of presentation to lawmakers distributed on Wednesday. Interim Chief Financial Officer Bob Head is working to properly value assets including aircraft, property and equipment, a task he’s expected to complete this month, while an analysis of irregular expenditure under previous management including suspended CFO Phumeza Nhantsi should be completed by September.
SAA said it plans to break even by 2021. It’s transferred aircraft to low-cost unit Mango to reduce capacity, cut back on routes to London and some West African destinations, and started talks with pilots and other workers to boost productivity. The government is exploring a plan to merge SAA with Mango and SA Express, Public Enterprises Minister Pravin Gordhan said Tuesday. The smaller SA Express is “on the verge of collapse,” lawmakers said Wednesday.
The airline reported a net loss of 5.7 billion rand in the year through March, more than double what it had budgeted, after carrying fewer passengers and incurring exchange-rate losses as the rand gained against the dollar. The fourth quarter was particularly damaging, with revenue falling 12 percent short of SAA’s expectations.
The full-year loss compared with 5.6 billion rand in fiscal 2017, and 6.1 billion rand three years ago.
The government overhauled SAA’s board in October, with Chairwoman Dudu Myeni, who ran former President Jacob Zuma’s charitable foundation, among those to be replaced.
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