The Free Market Foundation (FMF) announced on Wednesday that it is seeking information on the financial situations of both State-owned airlines, South African Airways (SAA) and SA Express (SAX), by means of Promotion of Access to Information Act applications. This follows the resignation of SAA CEO Vuyani Jarana, which became public knowledge earlier in the week.

“[I]t is [now] even more urgent that financial accounts for SAA, low cost subsidiary Mango and SAX are subject to public scrutiny before any more government and bank bailouts are made,” stated the FMF in its press release. It pointed out that SAA had not issued any audited financial statements since March 31, 2017 (when it revealed a loss of R5.4-billion), while SAX’s last audited financial statements were released in March 2016.

SAA did inform Parliament last year that it had made a loss of R5.6-billion in the 2017/2018 financial year. And a Treasury report to Parliament in late November said that SAX was technically insolvent, with liabilities exceeding assets. SAX itself has reported that it expected to make a loss in the 2018/19 financial year of R669-million.

Since 2007, SAA has received government bailouts and guarantees totalling R42-billion, including R5-billion last October. SAX last year was allocated R1.24-billion of public money to settle government-guaranteed debt.

“[Jarana’s] successor is tipped to be current SAX CEO Siza Mzimela. This must not happen without a full investigation into financial irregularity at SAX under her watch.”

“According to industry experts, while Mzimela was CEO, SAX deliberately, probably fraudulently, overstated its assets by valuing component parts of its aircraft, instead of the aircraft themselves, followed by generous executive bonus payments,” asserted the FMF. “SAX may now be unable to value its fleet properly without reflecting a massive loss and balance sheet write-down. SAX planes were grounded by the regulator, SACAA [South African Civil Aviation Authority], for safety reasons in 2018.”