SAA’s financials require ‘careful’ consideration

07 Apr 2016 - by Dorine Reinstein

SAA’s annual financial statements cannot be finalised until a decision is taken on their application.

The tabling of SAA’s outstanding 2015 financials and annual report has been delayed yet again by another month.

Last month, National Treasury requested an extension until March 14. The Minister has since requested another extension for the tabling of the Annual Financial Statements to April 30. “SAA submitted an application for a going concern guarantee on December 21, 2015, which is under consideration. Given the potential implication for the sovereign and for the economy the matter requires extensive and careful consideration. SAA’s annual financial statements cannot be finalised until a decision is taken on their application,” Phumza Macanda, spokesperson for National Treasury, told Tourism Update’s sister publication, TNW.

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Although SAA’s financial situation has been described as critical, Business Day recently reported that the airline was projecting “to generate a R177 million (€10 million) profit before interest and tax in the 2017-18 financial year, which would be a dramatic R720 million (€42 million) improvement from the R543 million (€32 million) loss expected for 2016-17”. The main driver of the expected gains, says the newspaper, is projected aircraft lease costs, which are forecast to remain relatively stable at R4bn in both years, while revenue is expected to rise 13% compared with the 12,6% increase in operating costs.

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Industry players have also suggested that SAA is again considering a direct flight to Mumbai, after it announced it would halt its codeshare with Etihad.

In April last year, SAA cancelled its direct flights to Mumbai and said it would reroute all traffic to India via Abu Dhabi as part of the codeshare with Etihad. However, now that the codeshare has ended, SAA no longer offers any connections to India for its frequent flyers.

SAA spokesperson Tlali Tlali remained tightlipped about the possibility of a direct flight. He said: “As and when there are route network announcements to be made, we will communicate such messages to the market and won't leave important commercial announcements to be transmitted to our customers as rumours.”