South African Airways (SA, Johannesburg O.R. Tambo) is no longer technically insolvent almost two years after it exited business rescue, South Africa’s National Treasury has reported to parliament.
During an online presentation to the Standing Committee on Appropriations on February 15, 2023, Chief Director of State-Owned Enterprises Ravesh Rajlal told the parliamentary watchdog that SAA had a net equity value of ZAR1 billion rand (USD55.4 million) on December 31, 2022. The South African Airways Group's net loss for the first three quarters of FY2022/23 was ZAR50 million (USD2.7 million), a significant improvement on the budgeted loss of ZAR637 million (USD35.3 million).
SAA exited business rescue on April 30, 2021, after having been in administration since December 2019. The flag carrier resumed commercial flights on September 23, 2021. A long-negotiated semi-privatisation deal between the government and the Takatso Consortium, its preferred strategic equity partner (SEP), for a 51% stake in the airline, is still under regulatory scrutiny.
Responding to a question on the SEP progress, Rajlal said there were two outstanding issues that needed to be addressed: “In order for progress to be made on the SEP, there are literally two outstanding issues, that we are aware of, that deal with some of the outstanding liabilities to the concurrent creditors and the unflown ticket liabilities. Once that has been addressed, we obviously will have some progress or some traction in terms of what’s happening on the SAA front.”
SAA's budget subsidiary Mango Airlines (MNO, Johannesburg O.R. Tambo) is in provisional liquidation, with its administrator taking legal steps to force public enterprises minister Pravin Gordhan to decide on a proposed sale to an unnamed interested investor.
Meanwhile, SAA’s maintenance subsidiary, SAA Technical (SAAT), recorded profits in the first two quarters of FY2022/23 but incurred a loss in the final quarter, resulting in a year-to-date loss of ZAR2.4 million (USD133,064). Still, the Treasury said SAAT was solvent with positive equity value of ZAR1.7 billion (USD94.2 million) on December 31, 2022.
SAA’s catering subsidiary, Air Chefs, posted a loss of ZAR6 million (USD332,702) at the end of December 2022, a considerable improvement on the ZAR195 million (USD10.8 million) loss incurred in the corresponding period in 2021.
The Treasury’s presentation formed part of an overall feedback to the oversight committee on the financial health of state-owned enterprises. Also noteworthy was a report on the Airports Company of South Africa (ACSA), which showed it had significantly recovered from the impact of Covid-19 pandemic-linked travel restrictions. ACSA posted a ZAR403 million (USD22.3 million) net profit for the first quarters of 2022/23 compared to an unaudited loss of ZAR1.47 billion (USD81.5 million) in 2021/22. ACSA did not expect to require additional financial support for the foreseeable future and was expecting to start generating net profits from 2023/24, the committee heard.
