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South African Airways may not be able to continue to operate as a going concern, while the struggling state-owned airline has failed to properly record financial information and the value of assets, according to the Auditor General.
SAA made a net loss of about 5.6 billion rand ($471 million) in the year through March 2017, according to a document signed by AG Kimi Makwetu. Liabilities exceeded assets by about 17.8 billion rand, it said.
“Six consecutive years of operating losses have further eroded the capital base and this continues to impact on the entity’s ability to operate in a highly demanding and competitive environment,” the AG said in the report, which was dated Dec. 8 and released Thursday.
A turnaround of SAA is among the most pressing items in the in-tray of South African President Cyril Ramaphosa, who has pledged to revive state companies after years of mismanagement and corruption allegations under Jacob Zuma eroded their balance sheets. Under new Chief Executive Officer Vuyani Jarana, the company is cutting routes and costs to reduce a dependency on government debt guarantees.
The airline is looking for an equity partner to provide cash to help turn it around. Former Finance Minister Malusi Gigaba said in November there had been interest in a deal, while SAA is also compiling a list of assets that could be sold.
The AG faced challenges in compiling the report as SAA didn’t keep a proper record of financial information or adequately value property, planes and other assets, he said.
SAA spokesman Tlali Tlali said he’s unaware of the report.
(Updates with search for equity partner in fifth paragraph.)
©2018 Bloomberg L.P.