The South African Airways (SAA) will need government loan guarantees and bailouts up until 2021. The company remains heavily indebted and continues to bleed losses throughout its operational routes. That’s according to SAA CEO Vuyani Jarana, who was before parliament on Tuesday.
The airline’s annual report, financial statement, irregular fruitless and wasteful expenditure was under scrutiny.
Jarana outlined the financial crisis facing the national airline. “The revenues of SAA are unable to cover our expenses. We have a very weak balance sheet.”
Apart from being unable to meet its operational obligations, the company has been accumulating debt since 2012.
Reducing this debt is one of the key elements needed to turn around its fortunes. But the airline continues to suffer huge losses.
“Our local routes are registering losses. The fleet, fuel expenses, landing rights…it means we are everything to everyone,” Jarana added.
There’s little confidence on whether the airline will recover anytime soon.
Incidents of theft and failure to account for the airline’s assets are complicating its turnaround strategy.
Chairperson of SAA Board, Johannes JB Magwaza says “There are serious levels of concern that we don’t have a full picture of. We are receiving SMS that alert us to massive theft at SAA.”
SAA needs further capital injection to manage its turnaround strategy and to remain afloat. The airline and Eskom are the biggest recipients of government loan guarantees and bailouts.
Luvuyo Jarana has also defended the sourcing of security services to protect top executives at the airliner. He says they were receiving threats.
Jarana has refused to divulge the costs of the security.
“As early as last year some of the executives started receiving threats as we started executing the work of change ad being given the work to executive forensic reports those were reported to the police.”
SAA senior executives were in Parliament to discuss their annual report, financial statement as well as issues of irregular, fruitless and wasteful expenditure.