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JOHANNESBURG — SA President Cyril Ramaphosa’s in-tray is growing by the day and he needs to start shifting things to the out-tray. One of the areas that he earmarked as a concern when at Davos was the country’s state-owned-enterprises. The Gupta-linked corruption has been one of the crippling elements, but mismanagement cannot be ruled out. Eskom’s new board is airing the energy utility’s problems, with newly-elected chair Jabu Mabuza saying the tough decisions are needed to be made, as the institution is overweight staff and assets, underweight income. The same can be said for the state-owned airline SAA. The institution’s results have been delayed countless times, but with Cyril at the helm, it seems the dirty laundry at various entities is being aired. Auditor-General Kimi Makwetu pulled the lid on SAA’s financial struggle, questioning the airlines ability to operate as a going concern. With Dudu Myeni at the helm the airline was costing taxpayers R12m per day (over R300m per month), and reported an operating loss for six consecutive years. New management has been drafted in with former Vodacom exec Vuyani Jarana taking the lead, so he does need time, but one has to wonder how much longer government can hold onto this vanity project at taxpayer expense. – Stuart Lowman
By Arabile Gumede
(Bloomberg) – South African Airways may not be able to continue to operate as a going concern, while the struggling state-owned airline has failed to properly record financial information and the value of assets, according to the Auditor General.
SAA made a net loss of about R5.6 billion ($471 million) in the year through March 2017, according to a document signed by AG Kimi Makwetu. Liabilities exceeded assets by about R17.8 billion, it said.
“Six consecutive years of operating losses have further eroded the capital base and this continues to impact on the entity’s ability to operate in a highly demanding and competitive environment,” the AG said in the report, which was dated Dec. 8 and released Thursday.
A turnaround of SAA is among the most pressing items in the in-tray of South African President Cyril Ramaphosa, who has pledged to revive state companies after years of mismanagement and corruption allegations under Jacob Zuma eroded their balance sheets. Under new Chief Executive Officer Vuyani Jarana, the company is cutting routes and costs to reduce a dependency on government debt guarantees.
The airline is looking for an equity partner to provide cash to help turn it around. Former Finance Minister Malusi Gigaba said in November there had been interest in a deal, while SAA is also compiling a list of assets that could be sold.
The AG faced challenges in compiling the report as SAA didn’t keep a proper record of financial information or adequately value property, planes and other assets, he said.
SAA spokesman Tlali Tlali said he’s unaware of the report.
Cyril Ramaphosa: The Audio Biography
Listen to the story of Cyril Ramaphosa's rise to presidential power, narrated by our very own Alec Hogg.