<\/p>\n
You can also listen to this podcast on iono.fm here.<\/p>\n
JIMMY MOYAHA: Yesterday we spoke to Dr\u00a0Guy Leitch on the state of South African Airways [SAA] and the financial crisis that seems to be looming there. The team at South African Airways is still set to appear before parliament and we are going to keep an eye out on that.<\/p>\n
For now, though, we do have the chief corporate affairs officer and official spokesperson of South African Airways joining us to take a look at the state of SAA in more detail. I\u2019m joined on the line by Mphilo Dlamini to see if we can make sense of what\u2019s happening at the state-owned entity.<\/p>\n
Ntate Dlamini, lovely having you on the show. Thanks so much for taking the time.<\/p>\n
The reports of liquidity challenges that have been confronting SAA and preventing SAA from paying certain salaries are certainly concerning reports.<\/p>\n
Read: SAA staggers salary payments as cash crunch deepens<\/p>\n
What is the current state of SAA in that respect? Where did the liquidity concerns come from?<\/p>\n
MPHILO DLAMINI: Thank you so much, Jimmy, for the opportunity. I think we need to paint a context here as to where we find ourselves as the global aviation industry.<\/p>\n
What happened at the beginning of the year, as you know, is the issue of the jet fuel that shot up [in price] immediately after the Iran war. That had a huge impact on the operations of the business.<\/p>\n
For instance, jet fuel now amounts to about 40% of our operations as a business. So you can imagine now that has a huge impact on the business.<\/p>\n
What then happened is that all along, since March when this happened, we were able to absorb most of the cost. We were able to continue to meet all our obligations, including staff salaries. But now in the month of September as well as in October, we then started staggering [these payments].<\/p>\n
But I must confirm to you and to the listeners that that affected not the entire complement of our staff. It affected only about, I would say, 40% or 30% of them because the majority of our people received their salaries on time.<\/p>\n
The staggering affected only pilots, management, as well as the executives on the board.<\/p>\n
So the majority of our people, the cabin crew, were paid on time. Talking of our ground staff, they were paid on time. So that is the context that I want to paint.<\/p>\n
But it is emerging from the crisis that happened in the Middle East that actually impacted the issues of geopolitical issues which impacted fuel.<\/p>\n
JIMMY MOYAHA: Ntate Dlamini, you mentioned of course that this affected the entire aviation industry, and we have been seeing that from our perspective as consumers as well.<\/p>\n
The question I suppose for SAA is when the tensions happened in the Middle East and the escalations began to happen from an operational cost perspective, why did SAA not increase its pricing and adapt accordingly?<\/p>\n
Other airlines increased the cost of ticket sales; other airlines introduced a fuel surcharge. What measures did SAA put in place?<\/p>\n
MPHILO DLAMINI: We did all those measures. We implemented increases in our prices of tickets. We introduced some fuel surcharges. But you can do [only] so much in terms of increasing or passing on the cost to your passengers.<\/p>\n
So we did all that, and I think we were comfortable in the state that we found ourselves in.<\/p>\n
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But, as I\u2019m saying, running an airline in Africa is itself very, very expensive in the sense that \u2013 let me make an example \u2013 the jet fuel price in Africa alone is about 17% higher than the global average.<\/p>\n
So you can imagine that even though we are in the same space, same competitive space in the global aviation industry, running an airline in Africa comes with its own financial burden and cost base \u2013 which are higher than the other regions.<\/p>\n
We are talking about issues of higher taxes in Africa \u2013 12% to 15%. So there are a lot of issues.<\/p>\n
Running airlines increases the cost base of airlines, and then you cannot pass all those [costs] on to your passengers.<\/p>\n
We did introduce a lot of measures to make sure that we cushioned the impact of this, but you can do [only] so much.<\/p>\n
JIMMY MOYAHA:\u00a0Ntate Dlamini, speaking of cushioning the impact, I want to take a look at the support that SAA has received. South African Airways, as recently as August of this year, has been confirmed to receive a R1\u00a0billion guarantee from National Treasury.<\/p>\n
Added to that, according to the audited financial statements of 2025 \u2013 which are the last audited financials we have available \u2013 the SAA business was pursuing a R300\u00a0million facility specifically for operational reasons.<\/p>\n
And just last year there was the sale of that Heathrow slot to the tune of a little over R1\u00a0billion. That\u2019s almost R2.5 billion of added cover from a business perspective. Are we saying that the business needs even more cover than that?<\/p>\n
MPHILO DLAMINI: No. I think we need to contextualise that again, and also make sure that we separate the issues.<\/p>\n
Let me make an example about the R1 billion guarantee. I think it\u2019s public knowledge that we received a government guarantee to the tune of about R1\u00a0billion from our shareholder.<\/p>\n
I want to tell you now that this is not a cash injection; it is just a mechanism or an instrument which we are going to use to raise capital from the different lenders \u2013 and we are doing exactly that with that.<\/p>\n
So the issue of the R1\u00a0billion slot, the Heathrow slot from London \u2013 I think that injection that came in the previous financial year went into operations of the business, because the business has not been cash-generative for a very long time. So we used that for that.<\/p>\n
We can\u2019t then say we have a cover of about R2\u00a0billion because those are totally different issues, Jimmy. And like I\u2019m saying, we are busy dealing with a lot of lenders, discussing and engaging them, and they are coming through for us.<\/p>\n
And then I want to also emphasise the issue of the facilities that you are talking about. Every business \u2013 no matter whether private sector or public sector \u2013 runs on facilities. It does need facilities at some point. So this is not unique to SAA.<\/p>\n
What we requested from the shareholder is to say \u2018Can we have a guarantee so that we can go to the market, the competitive market, the financial market, and make sure that we can raise capital on the back of the guarantee?\u2019<\/p>\n
Those are the things that we need to contextualise, Jimmy, when it comes to that. It\u2019s not like we have about R2.5 billion that we can\u2019t even manage. No, it doesn\u2019t necessarily translate to that.<\/p>\n
JIMMY MOYAHA: Something was also reported in the audited financials which are publicly available \u2013 the 2025 financials. At the time the financials were released, there was a clear comment towards the end of the integrated report \u2013 read, and I quote: \u2018Management has stress-tested the 12-month cash flow forecasts against the approved budget, and confirmed that current liquidity meets operating requirements in addition to enabling planned investments.\u2019<\/p>\n
That speaks to management confirming that the business\u2019s books are in order. Nevertheless,\u00a0Ntate Dlamini, I want to take a look at the audited side of the books you touched on. Audited financials were set to be released by the 30th of September. That deadline was missed.<\/p>\n
The oversight committee on transport confirmed that we would be receiving our audited financials for SAA by the 30th of October; that deadline is two days away. Are we likely to get those audited financials by the deadline?<\/p>\n
MPHILO DLAMINI: We are currently seized with ensuring that we complete our audit, Jimmy, as we speak now.<\/p>\n
But if we are unable to complete the audit, we are going to make sure that through the processes and the governance, the obligations that we have that we need to report, we are going to do so.<\/p>\n
But I can assure you that the finalisation of our audit is very close.<\/p>\n
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We are going to make sure that if we are unable to meet the deadline, we are going to communicate through our shareholder to make sure that parliament, [which expects the financials] at a particular time, is informed in time.<\/p>\n
And coming back to the issue of the liquidity \u2013 the one that we were talking about earlier \u2013 I can assure you that if we had not had the geopolitical issues that affected our jet fuel that compromised our cost base, we were not going to have the challenges of liquidity that we\u2019re having now.<\/p>\n
It could have been there, but I think it has been worsened by the issue of the geopolitical issues that happened in the Middle East.<\/p>\n
JIMMY MOYAHA: Ntate Dlamini, you mentioned liquidity concerns and navigating those liquidity challenges in these extreme market environments. Amid these liquidity concerns, are there concerns that these liquidity challenges could potentially affect lease payments on some of the aircraft that we have?<\/p>\n
I know that SAA has a certain portion of its fleet \u2013 as confirmed by the financial report \u2013 as leased aircraft not owned by the airline. Are we concerned around anything related to lease payments there?<\/p>\n
And if we are to look at the management that is specifically affected by the staggering of salaries, does this affect the bonuses and compensations of the boards in any way?<\/p>\n
MPHILO DLAMINI: Let me start with the latter part of your statement.<\/p>\n
At SAA we have actually frozen anything called \u2018bonuses\u2019 for executives, for staff, for the board. There is nothing of that kind because we are seized with this issue of making sure that we are an operating business.<\/p>\n
So one of the key pillars of our operation and our key dependencies is the issue of the resource that you\u2019re talking about.<\/p>\n
That is why sometimes we have these trade-offs that we have, where we delay payment of salaries to make sure that we prioritise flying.<\/p>\n
We want to make sure that people are flying, passengers are flying, as they have booked their flights.<\/p>\n
So that is why we actually at some point engage the unions, we engage organised labour, we engage our people to say the reason we are delaying your salaries by a day or two is because we want to make sure that SAA is up in the sky.<\/p>\n
That is why I can assure you that we are not defaulting on some of the key imperatives for us to fly.<\/p>\n
We are making sure that [for] all our aircraft fuel is available, [and] the lessors are happy that our relationship and our obligations with them are met, because our focus is to make sure that SAA is flying.<\/p>\n
That is why sometimes our people, our employees, sometimes understand that is the priority so that the company can continue operating.<\/p>\n
Let us make sure that we prioritise those key obligations before we actually focus on ourselves. That is the response. I can assure you that we are focusing on that.<\/p>\n
The liquidity [pressures] happened in March, but we have been going on for all these months because we\u2019ve been making sure that we are doing the right trade-offs to make sure that the business continues to operate.<\/p>\n
JIMMY MOYAHA: Macro factors definitely do that to a business.<\/p>\n
Ntate Dlamini, it would be remiss of me to not touch on the governance concerns that have been surrounding SAA.<\/p>\n
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We are currently sitting with an interim chief executive officer who is in the place of a suspended interim chief executive officer. The investigations thereof have just been concluded. That information, I imagine, you are still dealing with internally.<\/p>\n
Read: Now SAA\u2019s acting CEO Seshibe on \u2018special leave\u2019<\/p>\n
But what we know \u2013 that\u2019s been publicly available as a result of those investigations \u2013 is that part of the previous interim CEO\u2019s investigative findings was that there were breaches of the Public Finance Management Act which the previous CEO was found guilty of.<\/p>\n
That, of course, is a serious concern from a governance perspective.<\/p>\n
What would SAA be looking to do in terms of next steps? I\u2019m not asking you, of course, to comment on the findings themselves, but rather how SAA handles these matters \u2013 especially given that the Public Finance Management Act should be what state-owned enterprises hold themselves accountable to.<\/p>\n
MPHILO DLAMINI: I think this example is another example that demonstrates that the business is very serious on making sure that it is improving its governance environment; the controls are making sure that they are in place.<\/p>\n
We have zero tolerance for anything that seeks to breach those issues of governance.<\/p>\n
So that\u2019s an example where I think we have demonstrated that there\u2019s no one that is above the standards that we have set as a business to make sure that governance is something that can never be compromised.<\/p>\n
So the issue of the acting CEO who was placed on special leave is one testament that I can assure you is a demonstration that SAA is turning the ship around the areas of governance, the controls and environment, and making sure that we are an ethical business that can be trusted by our stakeholders.<\/p>\n
JIMMY MOYAHA: Ntate Dlamini, we are heading into the final period of the year, the festive period of the year. You\u2019ve assured us that the business is a going concern, that SAA will continue to fly. And I suppose for consumers going into the festive period the last thing anyone wants is to be stranded at an airport because of a cancelled flight.<\/p>\n
Are we confirming that the liquidity concerns that currently plague SAA would not affect the operations of the business going forward?<\/p>\n
MPHILO DLAMINI: That is what I said just now \u2013 to say SAA is open for business.<\/p>\n
Passengers must continue to book their flights. They are going to be able to enjoy their holidays in December.<\/p>\n
They are going to come back in January \u2026 after school holidays, because SAA is open for business, they can continue their forward bookings because the airline is moving from strength to strength despite the challenges being faced by all airlines, not just SAA.<\/p>\n
So that is a confirmation that I can make and an assurance that there won\u2019t be anyone stranded at our airport because SAA has been grounded.<\/p>\n
We can assure our passengers, we can assure our stakeholders, we can assure our creditors that we are a going concern, we are in business.<\/p>\n
The challenges that we are facing are the challenges that are global in the aviation space, but we are managing and we have been managing, and will continue to manage them.<\/p>\n
The business is busy, from a board and a management perspective, making sure that we are reviewing our strategies, our plans, our business plans to make sure that [they are] actually enough to meet all these issues that we are facing as an industry.<\/p>\n
JIMMY MOYAHA: South African Airways is confirming that despite their challenges they remain open for business and they are navigating those challenges as effectively as they are able to at this stage.<\/p>\n
We\u2019ll leave the conversation on that note. Chief corporate affairs officer and official spokesperson at South African Airways, Mphilo Dlamini, joined us to take a look at the state of SAA.<\/p>\n
#SAA #responds #questions #financial #position<\/p>\n","protected":false},"excerpt":{"rendered":"
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