Question mark over SAA's viability after qualified audit report
Auditor-General Kimi Makwetu has given both SAA and its subsidiary, Mango Airlines, qualified audits.
CAPE TOWN - Auditor-General Kimi Makwetu has put a question mark over South African Airways' viability after the state-owned airline posted a net loss of R5.6 billion for the past financial year, with its liabilities exceeding its assets by nearly R18 billion.
Makwetu revealed the dire state of SAA’s finances in his audit report, which he tabled at Parliament after SAA failed to produce its annual report.
Makwetu has given both SAA and its subsidiary, Mango Airlines, qualified audits.
The Auditor-General says that six consecutive years of losses have eaten away SAA’s capital base and its ability to operate in a highly competitive environment.
He says this, along with volatile exchange rates, maturing loans and a lack of working capital "cast significant doubt on the company’s ability to continue as a going concern".
Makwetu wants to know why SAA did not report to affected parties the reasons why a resolution to file for business rescue was not adopted while the company was in financial distress – a requirement of the Companies Act.
Makwetu cites serious deficiencies in internal controls as forming the basis for his adverse audit opinion and says leadership instability contributed to this.