Committee on Public Enterprises says airline in deep financial crisis
May 17, 2018
Parliament, South Africa: The Portfolio Committee on Public Enterprises says it concerned about South African Express (Sax) as it is experiencing serious financial challenges.
The Portfolio Committee on Public Enterprises was briefed by Sax on its 2017/18 annual report on Wednesday, May 16, 2018.
The committee was of the view that the company is experiencing serious financial challenges, as it is unable to meet its financial obligations and pay its bills on time. The committee also expressed concern about the airline’s failure to have its annual and financial reports signed off by the Auditor-General.
The committee also noted with concern that the airline was unable to table its annual report for 2016/17 before parliament last year.
The committee also criticised the airline for its failure to address operational challenges, such as flight cancellations and timekeeping, as well as poor communication with passengers.
Questioning the Sax delegation, the committee said its presentation paints a grim picture, showing that the airline is on the verge of collapse. Members of the committee mandated the Chairperson, Lungi Mnganga-Gcabashe, to engage with the minister to discuss the possibility of a cash injection for the airline from National Treasury.
Mnganga-Gcabashe said she has had discussions with the minister about challenges at Sax. Furthermore, in the minister’s budget vote speech it was announced that the airline is likely to require a recapitalisation from government to strengthen its balance sheet, return it to solvency and improve its credit worthiness.
Mnganga-Gcabashe said the minister is looking for solutions. “… seeing that the committee has mandated that I meet with minister to discuss the issue of capital injection and how National Treasury can assist with the airline, I will take up the matter,” said Mnganga-Gcabashe.
The committee said former directors and executives should be held accountable for the financial challenge facing the airline. Former Sax executives have left without being held accountable or facing any disciplinary action.
“No report has been presented of people being held legally accountable for misuse of state funds,” Mnganga-Gcabashe stated.
The board must strengthen its governance, monitoring and evaluation, she continued. “If the airline requests a capital injection from National Treasury, the committee needs a guarantee that we are not reinforcing maladministration, fraud and corruption.”