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SAA audit kicks off four years later as business rescue stalled process

SAA audit kicks off four years later as business rescue stalled process

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SAA’s audit by the auditor-general (AG) is finally under way after it submitted its financial statements for the past four years last week.

Backed up against the wall by parliamentarians in the standing committee on public accounts (Scopa), Fhumulani Rabonda, the deputy business executive at the AG’s office, and Modimela Singo, the acting business executive at the AG, said while SAA’s audit had got under way in August, after initial statements were submitted in May, the utility had subsequently resubmitted a fresh set of financial statements only last week.

The audit, which will cover the financial years 2018/19, 2019/20, 2020/21 and 2021/22, is expected to be completed in February or March next year.

“We could not start the audit because the financial statements of subsidiary Airchefs and SAA were not auditable, but then SAA and the subsidiary submitted in August. There were a lot of issues with the statements. We engaged on a continuous basis until another version was submitted last week,” Rabonda said.

The audit will have to be completed whether or not SAA has finalised its deal with the Takatso Consortium, which would have a proposed 51% stake in the national airline.

All indications are that the conclusion of the deal itself is expected around February when all regulatory processes have been completed.

When SAA was out of business rescue from April, 30, 2021, the Office of the AG got in touch to audit the financials. In February 2022, the 2017/18 audit was concluded with a qualified audit opinion – including uncertainty whether SAA was still a going concern and a disclaimer for Mango Airlines.

Singo said the airline had been facing financial viability challenges and had to wait after the Business Rescue process had been completed before it could submit the financials.

“Due to challenges with it being a going concern and viability, they had not submitted their statements for audit,” she said.

Scopa chairperson Mkhuleko Hlengwa said the committee would take up the issues with SAA possibly next week on the four-year delay in submitting its financials and would also deal with the arrangements with Takatso.

Meanwhile, Vimla Maistry, SAA’s spokesperson, said yesterday that the International Air Services Licensing Council (IASLC) had ratified that SAA retained all its historical route traffic rights, following SAA’s voluntary relinquishing of the number of frequencies on the destinations it was not currently servicing.

She said this was in accordance with legislated and prescribed procedural discussions with the IASLC on a quarterly basis to review and justify its route network plan and traffic rights to destinations it is not yet flying to.

SAA executive chairperson and CEO Professor John Lamola said: “SAA, as a buoyant national airline, has an important enabling role in the South African economy. Those routes and frequency licences that are not part of SAA’s medium-term plans will progressively be released to the IASLC for the benefit of the industry.”

Maistry said in the coming weeks the airline would be announcing the addition of more routes to its growing network. SAA will be introducing flights to Blantyre and Lilongwe in Malawi, Windhoek in Namibia, and Victoria Falls in Zimbabwe before the start of the festive season.

Together with increased frequencies to Accra in Ghana, Cape Town, Durban, Harare in Zimbabwe, Lusaka in Zambia, Mauritius and Kinshasa in the DRC, these changes represent the second phase of its post-Covid restart operations which commenced 13 months ago.

“The airline is on course to re-enter some of its traditional regional markets and enter new routes which remain under-served,” she said.

Plans are also under way to launch SAA’s first post re-start intercontinental route during the first quarter of the new year.

BUSINESS REPORT

Original Article

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