State-owned airlines SAA and SA Express are facing severe financial challenges, to the extent that they cannot finalise their annual financial reports.
This is according to a letter dated September 27 from Public Enterprises Minister Pravin Gorhan to both houses of Parliament – The National Assembly and the National Council of provinces – in which he explains why he has been unable to table the annual reports for the 2018/19 financial year.
In terms of the Public Finance Management Act, the minister is required to table annual reports, annual financial statements and audit reports of public entities within his department's oversight – in Parliament within six months after the end of the financial year. The reports were supposed to be tabled on September 30.
"The boards of South African Airways (SAA) and South African Express Airways (SA Express) have not been able to finalise and submit the annual reports to me within the PFMA prescribed timelines.
"Both airlines are experiencing serious financial challenges and are unable to meet going concerns," Gordhan said.
"SAA board has informed me that the newly appointed Interim CEO and the Interim CFO need more time to submit the required information for audit, to the Auditor General SA for the 2018/19 financial year.
"SAA, simultaneously, submitted a request to the Companies Tribunal, requesting an extension to hold its Annual General Meeting (AGM) … due to its inability to finalise the annual financial statements on a going concern basis," Gordhan said.
The Companies Tribunal has granted SAA an extension to hold its AGM by no later than the end of March 2020, he added.
Similarly, SA Express has been unable to finalise financial statement due to financial constraints, Gordhan said.
"Government remains committed to find a sustainable solution to the challenges facing the airlines," Gordhan assured.
He said the annual financial statements would be tabled as soon as the going concern challenges at the airlines are resolved.
Fin24 recently reported that SAA would receive a R5.5bn cash injection by the end of September.
SAA still requires an additional R2bn by December 2019, to fund working capital for 2019/20. The airline is in negotiations with lenders regarding the R2bn.
Government is working on a proposal to consolidate airlines SAA, SA Express and Mango.
Gordhan also notified Parliament that diamond miner Alexkor has not been able to finalise its annual reports either. "Alexkor is experiencing serious financial challenges that have delayed the finalisation of the financial statements," Gordhan said. The documents will be tabled as soon as they are finalised.