South African Airways (SAA) has this week submitted, to the Standing Committee on Public Accounts (SCOPA), a report outlining its plans to finally submit their long overdue annual financial statements to Parliament. At a 13 November SCOPA meeting, the board of directors admitted that the national carrier is insolvent and bankrupt, but denied that it was trading recklessly.
Despite the desperate financial circumstances of SAA, its board of directors have steadfastly refused to publish annual financial statements for the past two financial years and are clearly acting in violation of Section 55 of the Public Finance Management Act (PFMA). In addition to this, the board has essentially allowed SAA to trade recklessly for some time as the national carrier has not been able to pay its debts when they become payable and thus have acted in violation of Section 22 of the Companies Act.
When the Democratic Alliance (DA), at the 13 November SCOPA meeting, stated that the SAA directors were allowing the airline to trade recklessly, they vehemently denied this claim. Now, a mere two weeks later the board of directors, in its report to SCOPA, acknowledge that they are allowing SAA to trade recklessly, as:
- “lenders were not willing to extend facilities even on the strength of government guarantees”; and
- “In the circumstances it is clear that the uncertainty of not knowing whether shareholder’s funding is available to the Board and commitment to supply a suitable guarantee to the lenders means the Board can no longer rely on the Bowmans opinion and therefore it would be reckless for the company to continue trading.”
The time has come for SAA to be honest with the public and Parliament, and admit that the airline is at a point of no return.
The DA will continue to hold the Minister of Public Enterprises and the board and executives of SAA accountable for the billions of Rands of wasteful expenditure on the failing airline all at the expense of service delivery and economic development that would give opportunities for all South Africans, but particularly the poor, to achieve their full potential and to pull themselves out of poverty.