South African Airways in Legal Turmoil Over Delayed Financials

South African Airways (SAA) is once again under the spotlight after failing to publish its annual financial statements within the legally required timeframe, a transgression that has invoked widespread concern over the airline's transparency and financial health. The Companies Act mandates that all companies, state-owned or private, must release their financial outcomes within six months of the financial year-end. However, SAA has repeatedly delayed this process.

With the deadline of September 30 looming, the state-owned enterprise has yet to provide any indication that it will meet its obligations, a scenario that has become all too familiar. Since 2019, SAA has neglected to release its annual reports in a timely manner, only tabling the 2019 to 2022 reports in December last year. These showed cumulative losses surging past R23 billion, a financial pitfall that the airline attributed to the upheaval of business rescue proceedings and the COVID-19 pandemic. Despite these reasons, the failure to release financial statements equates to a breach of the law.

The broader impact on South African taxpayers is staggering, with SAA's fiscal strain nearing R80 billion when summing past losses and state-funded bailouts. Minister in the Presidency for Planning Monitoring and Evaluation, Maropene Ramokgopa, noted last month that outstanding issues have delayed the finalization of the airline's annual report, but specifics were not disclosed. Inquiries to SAA and the minister went unanswered, leaving the public and authorities in the dark about the airline's current viability.

Critics, including Wayne Duvenage from the Organisation Undoing Tax Abuse, argue that insufficient transparency surrounding SAA's financial position is unacceptable, highlighting that the legal onus rests on the carrier to disclose its fiscal status, now that it has exited business rescue.

The potential ramifications for non-compliance extend beyond legalities. According to industry conversations, the Air Licensing Council might review SAA's capability to sustain its commercial aviation business without updated financial information. Furthermore, the Companies and Intellectual Property Commission (CIPC) has been silent on whether SAA has faced any penalties or fines for its failure to meet legal requirements.

To maintain registration as a company, SAA is presumed to have filed returns based on its turnover to the CIPC—the bare minimum for company registration in absence of complete financials. As the deadline approaches, the future of South African Airways hangs in a delicate balance, with its compliance, credibility, and operational fitness subject to intense scrutiny.