SAA's Four-Year Financial Plunge: R23.5 Billion in Losses Despite Turnaround Claims

The financial turbulence for South African Airways (SAA) has taken a quantifiable toll, as detailed in the long-awaited annual financial statements for the past four years. Presented last Friday, the documents shed light on the severity of the airline's economic challenges. Public Enterprises Minister Pravin Gordhan delivered the grim news to Parliament, confirming the cumulative losses that have battered the national flag carrier.

Between the fiscal years 2018/19 and 2021/22, SAA sustained a colossal R23.5 billion in pretax losses, with annual figures reflecting a distressing trend. The 2018/19 financial year alone suffered losses of R6.5 billion, followed by a R5.7 billion loss in 2019/20. The subsequent year, 2020/21, saw the greatest lapse, recording losses amounting to R7.6 billion, while the latest figures from 2021/22 show a loss of R3.7 billion. These statistics were initially highlighted in the Sunday Times and have stirred significant public and political concern.

Despite the doom and gloom of these numbers, optimism is being projected from within the airline's leadership. SAA's interim chair, Derek Hanekom, along with interim CEO John Lamola, signaled in the 2022 annual report that the airline holds a positive equity position. Confident in the continuation of SAA's operations, the directors argued that the financial statements were prepared with the assumption of a going concern, essentially stating their belief in the airline's ability to recover and maintain financial sustainability.

Parallel to the financial revelations, the Special Investigating Unit (SIU) has turned its focus on SAA, unveiling the sheer scope of alleged corruption that has plagued the airline. Andy Mothibi, the head of the SIU, outlined before Parliament's Standing Committee on Public Accounts (Scopa) that there are currently 24 cases under investigation linked to corruption within SAA. The enormity of the graft claims has cast an even longer shadow over the state-owned entity, with the SIU's recovery efforts thus far totaling a modest R14 million. Nonetheless, there remains a cautious hope as projections estimate a potential recovery of roughly R3.4 billion.

The pursuit of these recoveries, however, is anticipated to be an arduous journey. Mothibi openly acknowledged the investigative challenges exacerbated by the departure of numerous employees who either failed to return critical documentation or were retrenched without proper handover protocols.

South African Airways' financial distress and the ongoing investigations underscore the broader struggle of state-owned enterprises in South Africa, often marred by inefficient management and allegations of corruption. The simultaneous display of significant financial loss and the expression of recovery assurance by SAA's interim leaders highlight the complexities involved in resolving the airline's crisis and restoring its profitability and reputation.