The embattled South African Airlines posted a loss of R1.5 billion in the latest financial year.
“The performance for the year is pleasing in that despite the volatility of the rand, the airline posted an actual loss of R1.5 billion, not far off the budgeted R1.4 billion, compared with R5.6 billion in the previous year,” said Musa Zwane, acting chief executive of SAA.
The airline’s annual report for 2015-2016 was submitted by Treasury to Parliament today.
It just made the deadline, unlike last year’s annual report which was submitted almost a year late.
Zwane said that the improvement on the previous year “was irrespective of the unexpected currency volatility, demonstrates the robustness of the budget and reflects its integrity”.
“The tremendous pressure that the income statement has been under was somewhat relieved.”
He largely blamed the loss on the rand’s volatility.
“The rand/dollar exchange rate declined by 23% compared to the average in the previous year. This has a significant impact, with 57% of the group’s operating costs denominated in foreign currencies. The currency is not expected to recover to previous levels in the near-term. We will be investigating initiatives to ease the group’s exposure and increase revenue in hard currency.”
He also said the drop in oil price made it difficult to repatriate money “from some of the oil-rich African countries in which we operate”.
“SAA relies heavily on guarantees from the government as the company is undercapitalised. While SAA is appreciative of the government’s guarantees, the unintended consequence is that when the interest rate goes up this will have considerable impact on the balance sheet.”
In the 2015-2016 financial year, R861 million was paid in interest.
“SAA is looking at initiatives to reduce interest and for now we continue to focus on improving revenue,” said Zwane.
Treasury recently granted SAA’s application for a R5-billion bailout on strict conditions of financial stability over the next five years.
A new SAA board was recently appointed, although Dudu Myeni, the controversial chairperson of the Jacob G Zuma Foundation, was retained as chairperson.