As the government scrambles in a last-ditch attempt to save SAA, it has emerged that the national carrier’s financial losses amount to R10.4bn over the past two years.
SAA has revealed in documents provided to parliament that it has not been able to finalise its annual financial statements for the past two years due to fears by its directors that it was not a going concern.
The FM understands that there have also been fears that the airline was "trading recklessly", but the documents indicate that the board has allowed operations to continue after receiving two legal opinions from law firm Bowmans.
The information provided to parliament this week also indicates that government indecision over what to do with SAA had created "huge uncertainty", contributing to its financial crisis.
Vuyani Jarana resigned as SAA CEO in June after just 17 months in the post, saying red tape was slowing down decisionmaking needed to turn the airline around.
During its interaction with the auditor-general, SAA indicated that it required the support of lenders and the government to extend the maturity of its legacy debt of R9.2bn by more than 12 months.
It also had to secure working capital for a 12-month period after its annual financial statements were signed off "to satisfy the liquidity requirement and to support the going concern assumption".
The board’s documents said: "There was also no indication from the shareholder that guarantees and financial support would not be made available. However, given the recent inconsistent messages from government about support for SAA, it has created huge uncertainty."
The board said that while the government had provided support, securing funding remained a concern.
In a letter to parliament’s standing committee on public accounts last week, SAA apologised for its failure to provide its annual financial statements. It blamed the strike action by unions for its failure to meet the November 20 deadline for submitting its documents.
Unions — which have also been blamed by the government for the crisis — are eyeing a court bid to have the airline placed under business rescue.
Irvin Jim, general secretary of the National Union of Metalworkers of SA (Numsa), says his union is set to meet trade union Solidarity about joining the latter’s court bid to place SAA under business rescue.
Solidarity’s Corné Mulder says it had applied for the case to be heard on an urgent basis, but it is likely that the matter will be heard only in 2020. The court will decide whether SAA can be placed under business rescue or whether it should be liquidated, he says.
Mulder welcomes Numsa’s intention to join its application — SAA and the government are opposing it.
Unions still believe the airline can be saved. Jim says Numsa is open to an equity partner, which the government is seeking.
While the strike was blamed for the feverish effort to save the airline, its documents — which include draft financial statements — show that it had made a loss of R5.2bn for each of the past two financial years. The financial statements show that its liabilities exceeded its assets by R13bn in 2017/2018.