According to the latest information given to the country’s parliament, South African Airways (SAA) has gone broke and is suffering very much financially.
There are many concerns that the once highly esteemed airline may soon be unable to pay salaries.
A cash-flow statement shown to the South African government shows that matters may improve by October, but only if the airline gets a 792million Rand (about £45m) bailout from the government.
Even then, the situation is expected to deteriorate again by December with a forecast cash outflow in that month of £38m.
Since January this year, the acting Chief Executive Musa Zwane, who has led the company for the last 18 months, has been trying to put together a recovery plan. For the past seven years, the airline has been going downhill financially.
“The Directors are reckless”
Malusi Gigaba, South Africa’s Finance Minister, has disclosed that the national airline begged the Treasury for urgent help in March. They asked for a £560m recapitalisation. The Minister is expected to give an answer by October.
Alf Lees, the deputy finance spokesman of the opposition Democratic Alliance, said:
“Essentially they are insolvent and should have filed for liquidation. We believe that the directors are in breach of the South Africa companies act by continuing to trade recklessly knowing that SAA will not be able to meet its financial commitments and without any guarantee that the shareholder (the South African government) will be prepared to continue to bail them out.”
Corruption, Corruption, Corruption….
Since 2011, there have been numerous reports that there has been gross mismanagement and evidence of poorly negotiated contracts awarded by the airline. One such report comes from Ernst & Young (2015) who said that 60% of the business contracts awarded by the carrier were improperly negotiated, poorly contracted or weakly managed. The report by Ernst & Young paints a picture of rampant mismanagement, fraud and corruption. SAA has lost billions because of tender irregularities.
Whatever the main problem might be, it is clear that the state owned entity is being looted. Corruption at SAA is rife and increasing by the day.
And as if that is not enough, the pressure is mounting very rapidly on the Airline`s management. The South African Cabin Crew Association (SACCA) are planning a march on Friday to SAA’s Johannesburg headquarters. The Cabin Crew are threatening strike action over pay, claiming that the pilots have been getting generous pay awards while cabin crew, ground staff, cargo staff and technical staff have been denied wage rises.
We all hope and pray that the airline will turn over a new leaf financially.