SAA’s latest audit reveals millions spent irregularly

2014-03-05 00:00

CAPE TOWN — In the past financial year, South African Airways irregularly spent R34 million and wasted R20 million more, according to the audit of the airline’s latest annual statements.

These amounts were confirmed yesterday during a submission by the SAA’s executive to the parliamentary portfolio committee for public enterprises.

SAA’s financial head, Wolf Meyer, said that money wasted had increased from R4 million in the previous financial year to R19,9 million.

“It has to do with inefficiencies at Air Chefs [SAA’s meals service affiliate] which boils down to [inadequate] supply management practices.”

Meyer said the irregular expenditure was in terms of ground handling and office space contracts.

He said the SAA received an unqualified audit this year.

“We achieved 60% of our targets. It is an improvement on the past year, but is not yet where it must be,” Meyer said.

The airline had in the past financial year recorded a net loss of R1,2 billion.

Opposition parties yesterday wanted to know when the SAA would become profitable.

DA MP Natasha Michael said more clarity was also needed on the amount the SAA will need to re-capitalise.

The airline is currently negotiating with the treasury for a capital injection.

Michael said the guarantee of R5 billion, which the airline had received from the treasury, was certainly not enough to recapitalise SAA.

Chief executive officer of SAA, Monwabisi Kalawe, yesterday said the negotiations with the treasury were still at a sensitive stage and added that he would rather not expand on the matter.

He said it was not always correct to compare SAA with private airlines, as SAA had a double mandate of being commercially successful; as well as a development mandate which they execute on behalf of government.

This development mandate forced SAA to, amongst others, fly to Beijing, regardless of the fact that the airline loses more than R300 million on this route.

“The board and the executive must always maintain a balance between these two mandates. Private companies do not have this double mandate,” said Kalawe.

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