The Committee was informed that even with a recapitalisation of R10 billion, SAA will remain under-capitalised, with a negative equity position of just over R9 billion

CAPE TOWN, South Africa, November 22, 2017/APO Group/ -- 

The South African Airways’ (SAA) new leadership, the Chairperson of the Board and the Chief Executive Officer (CEO) appeared before the Standing Committee on Appropriations at Parliament yesterday to brief the Committee on future strategies and funding of SAA.

Although both the Chairperson of the Board Mr. Johannes Bhekumuzi Magwaza, and the CEO Mr. Vuyani Jarana, have assumed the positions only 20 days ago, they had to  brief the Committee. “The Committee is acutely aware about the fact that this leadership is only 20 days in office, but had to  conduct this very important briefing,” said Ms. Pinky Phosa, Chairperson of the Standing Committee on Appropriations.

The Committee was informed that even with a recapitalisation of R10 billion, SAA will remain under-capitalised, with a negative equity position of just over R9 billion. According to Mr. Jarana, reasons for SAAs reliance on debt include a weak capital structure, overreliance on leasing aircraft, increased competition and ageing fleet and poor fleet profile.

In thanking the SAA leadership, Ms. Phosa said the Committee appreciated the presentation and the frankness in which it was shared with the members of the Committee. She said the Committee is happy that all governance structures are in place as that builds confidence, and reassures the members of the Committee and the public that the enabling pillars for sustainable operations are in place.

She said it is reassuring that funding has been ring-fenced for the repayment of lenders. “The Committee welcomes the submission by SAA that it is committed to running an accountable and transparent business.” The Committee was in full support of the SAA Board’s submission that there will be zero tolerance on corruption and that they will be very decisive on any acts of corruption.

Ms. Phosa told the SAA leadership that the Committee is concerned about the fact that the Annual Financial Statements were not submitted on time. “Going forward, the Honourable Members would really wish to see timely reporting on accountability documents. We want a complete revamp in the reputation of SAA. It must become positive. It is clear that ethics and professionalism will need to be entrenched into the inner fabric of SAA. This is critical to build trust with not only the lenders and the banks, but with all stakeholders and all South African citizens,” reiterated Ms. Phosa.

The Committee welcomed the fact that there is now a multi skilled and multi-talented SAA team comprised of an experienced and capable board and a young and energetic executive team in place. The Committee was assured that the challenges experienced in SAA were not insurmountable and there have been similar cases elsewhere in the world and that there are many examples where change was executed successfully.

The Committee will allow the board and the executive space to go and bury themselves into the implementation of the strategy and that they may submit written quarterly updates, though we give them six months wherein they will come back to Parliament for a comprehensive briefing on work done”.

Distributed by APO Group on behalf of Republic of South Africa: The Parliament.