SAA’s finances rattle MPs

Members  of parliament’s standing committee on public accounts raised concerns yesterday about the going-concern status of South African Airways.

This was an issue raised by the auditor-general on the 2016-17 financial statements and was only settled after the state put a R10billion cash injection into the airline late last year.

ANC MP Mnyamezeli Booi said it appeared that the airline had no capital to run itself.

SAA chief executive Vuyani Jarana noted in reply that the airline’s balance sheet was weak, with a negative equity of R9.2-billion.

This debt would mature in March next year, which presented a real challenge.

“That is not the position that any business can run with‚ where it has negative equity as we have today‚” Jarana said.
“Any business has a maximum debt-carrying capacity.

“The moment you overburden a business with debt you get to a point where it is unable to carry its repayments‚ whether it is interest or the principal amount.

“As things stand today‚ SAA is not able to pay the principal amounts.

“We are bearing interest which already indicates the debt is burdensome.”

To address going-concern status it was critical to address the funding of the R9.2-billion and that of the implementation of the turnaround strategy.

Jarana said the balance sheet could not support the acquisition of assets and its revenue was not sufficient to cover its costs‚ which meant that at the end of the financial year it reported billions of rand in losses.- BusinessLIVE