SAA’s losses for 2014/15 almost R1bn more than R4.7bn guarantee

20 September 2016

Cape Town - SAA’s losses for the 2014/15 financial year was R5.6bn — close to R1bn more than the expected amount of R4.7bn.

This emerged when the national carrier presented its 2014 to 2015 interim financial statements to parliament’s standing committee on finance on Tuesday.

Finance Minister Pravin Gordhan said in Parliament last week that SAA’s loss for 2014 to 2015 would amount to R4.7bn. However, when the airline tabled its preliminary financial results late on September 15, Gordhan pointed out that there had been technical difficulties which could result in material changes to the financials.

On the day when the airline submitted these financial statements - a year overdue and more than 18 months after the end of the previous financial year -  the report didn’t contain the auditor’s report and could still be subject to changes.

Two matters that were expected to have a significant effect on the financial statements are the anti-competitive claims lodged by Nationwide and Comair airlines that are likely to cost SAA more than R1.1bn in penalties. Originally, the airline didn’t make provision for these penalties.

The courts ruled in favour of Nationwide who received a damages claim of R104.4m.

In the Comair case against SAA the airline put forward a damage claim totalling R898m, but it also asked the court to add 15.5% interest, which could increase the total in damages to R2bn.

In both cases SAA is sued for entering into agreements with travel agents from 2001 to 2005, whereby it paid them to divert customers to SAA rather than other airlines.

SAA acting chief financial officer Phumeza Nhantsi said in her financial presentation before parliament that for the current financial year, SAA managed to limit its loss to R1.4bn. “This is a huge improvement, compared to the previous year,” she said.

SAA acting chief executive officer Musa Zwane said the national carrier was able to present its 2015 to 2016 financial results to National Treasury on Sunday. Therefore, Nhantsi was able to give a brief overview of the financials of the current financial year.

She pointed out that SAA’s revenue remains stagnant at R30.3bn, but that the situation was much better than the previous financial year when SAA faced impairment costs of R1.9bn. Impairments for the 2015 to 2016 financial year was estimated at R158m.

This article first appeared on Fin24, see here.