In the wake of news that South African Airways (SAA) needs a R21.7-billion over three years in order to turnaround, Parliament's portfolio committee on public enterprises has heard that one of its subsidiaries, SA Express, is also facing a bleak future.
SA Express executives reportedly presented the airline's 2017/18 financial report to Parliament on Wednesday, Fin24 reported. Banks will no longer support the airline without a clear turnaround plan, backed by government funding and government recapitalisation, according to Fin24.
The 2016/17 annual financial statements cannot be signed off until government funding is concerned, the airline executives reportedly said. SA Express' fruitless and wasteful expenditure reportedly amounted to R42-million, as a direct result of penalties for late payments and interest charges on invoices.
Irregular expenditure of R350-million was attributed to employees not adhering to procurement regulations and a further R350-million in irregular expenditure was attributed to tenders not being advertised.
SA Express also reported an operating loss of -4.75 percent.
According to Eyewitness News (EWN), SA Express has lost 10 percent of its staff, and about 40 of these were pilots or technicians. Of the 20 aircraft at its disposal, seven are grounded and two are reportedly beyond repair.
Acting chief financial officer Mpho Selepe reportedly told MPs, "Things are just going pear-shaped. The liabilities grow, but the revenue is dwindling."
But minister of public enterprises Pravin Gordhan will reportedly only make a decision on whether to bail out SA Express once he has received the financial statements from Auditor General.
Business Day reported this week that SAA also needs government capitalisation in the form of a Treasury bailout and loans from banks, to the tune of R21.7-billion if it is to become profitable again.