South African Airways’s losses for the current year are expected to reach R4 billion, the state-owned carrier’s Chief Financial Officer told Parliament on Wednesday…
Phumeza Nthantsi said the reason the company’s losses would exceed a forecast of R2,8 billion was largely related to the retirement of five aircraft which has forced it to cancel certain flights.
The airline’s new chief executive Vuyani Jarana told Parliament’s Standing Committee on Finance that the company would have to find R4 million to pay back foreign and local lenders by the end of March in 2018. These include US lender Citibank.
He said he saw his main task as “bringing back liquidity” to the company that currently had outstanding debt of R13,8 billion.
SAA received its last cash injection from government in September when Finance Minister Malusi Gigaba released R3 billion from the National Revenue Fund to stave off a default by the company on its Citibank debt obligations.
The airline’s executives on Wednesday attributed the company’s extreme reliance on debt on its weak capital structure, high cost structure, increased competition and over-reliance on leasing aircraft.
It marked Jarana’s first appearance before the finance committee since taking the helm at the airline, which is seen as one of the major fiscal risks to the South African economy.
Committee chairman Yunus Carrim said the spirit of the meeting, including executives’ readiness to answer questions, marked a welcome shift. The committee was among those to call for the departure of controversial, long-serving SAA chairwoman Dudu Myeni. She had been accused of meddling in operational matters and was fired a month ago.