“The fact that we don’t have liquidity we are technically insolvent. To be able to table accounts we need to satisfy ourselves as a board that we are a going concern”
Cash-strapped SAA has warned that it will lose R50 million a day if the strike by the unions goes as planned.
The SAA board was briefing Parliament’s finance watchdog, the Standing Committee on Public Accounts yesterday, when it said it was facing a financial crisis.
It said it cannot table its annual reports with audited financial statements because of the going concern issue.
The board needs to be assured it will have cash for the next 12 months before it can table its audited financial statements in Parliament.
Board member Martin Kingston said the situation was precarious at SAA and if the strike by Numsa and the South African Cabin Crew Association goes ahead it would further cripple it.
He said the strike was unaffordable and it would cost the airline R50 million a day. The strike would have a severe impact on the operations of SAA in terms of customers and suppliers of fuel to the aircraft of SAA.
Acting Chief Financial Officer at SAA Deon Fredericks said they cannot sign off on the audited financial statements because it would lead to a disclaimed audit opinion by the Auditor-General.
“The moment you get a disclaimed audit opinion you will have no credit extended to you. If you sign that audit opinion, fuel suppliers will pull out and I’ll have to find R58 million tomorrow. It is to indicate the house is on fire,” said Fredericks.
Kingston said they are insolvent.
“The fact that we don’t have liquidity we are technically insolvent. To be able to table accounts we need to satisfy ourselves as a board that we are a going concern,” said Kingston.
He said SAA has been incurring huge losses over the years.
Finance Minister Tito Mboweni said a few weeks ago SAA has suffered losses of R28 billion in the last 13 years.
Kingston said they require cash and if they signed off on the financial statements the airline will be in serious trouble.
This would have an effect on the lenders.
The National Treasury has said it will settle SAA’s loans of R9.2 billion.
But Kingston said if they signed off on the audited financial statements and they get a disclaimer from the Auditor-General, their leases will be accelerated as well as other financial obligations.
“We are talking of R40 billion on obligations that will have to be settled immediately,” said Kingston.
This was money SAA did not have and they will now have to wait until after their annual general meeting when the financial statements will be approved.
But Scopa members said SAA did not even know the date for the submission of the financial statements and they will not allow State-Owned Entities to get bailouts without conditions.
They said SAA and other SOEs have been relying on bailouts for many years and failed to account on how the money was spent.
Scopa said the SAA board and its executive management must return to Parliament to answer on its failure to submit financial statements.
This was in line with the law and all public entities have to account to Parliament.