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SA: Public Enterprises Committee says Sax is experiencing serious financial challenges

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SA: Public Enterprises Committee says Sax is experiencing serious financial challenges

16th May 2018

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The Portfolio Committee on Public Enterprises was briefed by South African Express (Sax) on its 2017/18 annual report. The committee noted with concern that the airline was unable to table its annual report for 2016/17 before parliament last year.

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.

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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, Ms Lungi Mnganga-Gcabashe, to engage with the minister to discuss the possibility of a cash injection for the airline from National Treasury.

Ms 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.

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Ms Mnganga-Gcabashe said the minister is looking for solutions. However, “… 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.”
 
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,” Ms Lungi Mnganga-Gcabashe said.
 
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.”
 
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.

Issued by Parliamentary Communication Services on behalf of the Chairperson of the Portfolio Committee on Public Enterprises, Lungi Mnganga-Gcabashe

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