Pressing financial problems for SA Express, SAA

Public Enterprises Minister Lynne Brown has told Parliament that SA Airways Express is facing dire financial circumstances and will need government assistance to remain a going concern. Image: GCIS

She said discussions were under way with Treasury about granting the airline a guarantee to allow it to continue its operations.

Treasury was also considering an application by South African Airways for an additional going-concern guarantee. Government guarantees to various state-owned companies already exceed R450bn, a major concern for Treasury.

In letters to National Assembly speaker Baleka Mbete‚ Brown explained why the two state-owned airlines were not able to table their financial statements by the end of September as required by the Public Finance Management Act (PFMA).

With regard to South African Express Airways‚ the minister said that in terms of the Companies Act the airline was required to be able to continue operating on a going-concern basis for a period of at least 12 months after the signing of the annual financial statements. It had to satisfy the act's solvency and liquidity tests to do so.

Going-concern requirements

One of the planes that is used by SA Airways Express. The airline is reportedly in deep financial trouble and without government assistance will not remain in business. Image: PlaneSpotters

"SA Express is currently unable to demonstrate such ability without government financial support. The airline has applied for a going-concern guarantee and this is being assessed by government.

"In this regard‚ my department and National Treasury are in discussions to find a solution to the financial challenges of the airline‚" Brown said.

In these circumstances the airline's annual report‚ financial statements and audit report could not be tabled by the September deadline‚ which is six months after the financial year-end in March as required by the PFMA. Brown said the tabling of the report would be made once the request for the going-concern guarantee was finalised.

Brown said she had had to postpone the annual general meeting of South African Airways (SAA) because the airline had not been able to submit its annual financial statements and integrated statement to her before end-August. She could therefore also not table the annual report by the deadline of the end of September.

Neither could Broadband Infraco's 2014 integrated report be tabled because it was being transferred from the Department of Public Enterprises to the newly created Department of Telecommunications and Postal Services and was not able to hold its annual general meeting in time to meet the deadline.

Source: BDPro via I-Net Bridge