South African Airways (SAA) has committed to improving its audit outcomes for its 2026/27 financial year and to improving its operation financial sustainability/.
Image: File
South African Airways (SAA) may have reported a profit in 2024/25, but the Auditor-General (AG) has left no doubt that the airline is out of control financially and is crashing, that its financial figures cannot be trusted, and that its staff are operating without consequence.
Parliamentary Portfolio Committee on Transport members, clearly amazed at the severity of the details that lay behind the AG’s disclaimer on the airline’s financial statements, responded to the AG presentation on Tuesday with words such as:
“This was difficult to listen to” and “it is clear the AG does not believe most aspects of the financial statements to be true,” and “people are clearly doing as they wish at SAA, with no consequence.”
The national carrier came out of business rescue in 2021.
The committee heard that the R155 million profit for the year was mainly due to routes being sold, and that its level of operational profitability was not sustainable, a fact also later acknowledged by the acting Group CEO in Matshela Seshibe in the meeting.
The AG said SAA was leaking financially in supply chain management (SCM) and procurement practices, in particular. It said SAA was following outdated operational and financial management practices and policies. Key financial and operational targets were being missed, and there was still too much manual record keeping, with no backups. Critical staff vacancies were not being filled.
There were also zero disciplinary proceedings for the rising instances of irregular expenditure and fruitless and wasteful expenditure, and no procedures to investigate, and no investigations into these matters. There were a few high-profile cases being investigated at subsidiary SAA Technical, while the many other smaller instances of these cases where “the money has feet…are piling up.”
There was no head of audit function, and there was no control oversight over key compliance and SCM controls. Record keeping was poor.
There were insufficient automated digital compliance processes. Some tender bids were not conducted according to proper tender procedures. In some instances, bids with the highest prices were chosen, and some bids were not transparent or fair.
There were instances of contracts being paid for no work done, or for contracts that had already been concluded. In some instances, contractors were paid amounts in excess of the tender award. Confirmed supplier registers were either incorrect or incomplete. Information provided could not be relied upon.
The staff did not possess the required SCM or procurement skills, and there was no training or refresher course on these matters.
SAA’s management had presented to the AG a positive operating profit, but the AG disputed that. The AG believed SAA’s current operations to be financially unsustainable through the 2024/25 financial year.
The committee later heard that the Special Investigative unit (SIU) and the Asset Forfeiture Unit investigations at SAA Technical were far advanced regarding the theft of avionic equipment.
Some convictions of staff had taken place who had been caught with their “hand in the cookie jar,” asset preservation orders had been issued, lifestyle audits were being introduced at SAA Technical, security procedures were being improved, and conflicts of interest were being investigated.
SAA board chairman Sedzani Mudau, appointed last August, said there was a focus on digitisation. She said they were putting pressure on repatriating some R1.1 billion of SAA funds from other jurisdictions, most of which was in Zimbabwe, which would help in the financial sustainability of the group.
She said the group’s property portfolio could be leveraged to improve the company’s financial sustainability. In addition, the company could also benefit from better cost management initiatives.
She said they aimed to improve their audit in the 2026/27 financial year, and they hoped for a “clean audit in one of the outer years. We are not going to come with another disclaimer.”
The portfolio committee chairman Selelo Selamolela said the committee would monitor SAA’s progress closely.
“We will explore the possibility of you telling us what is your turnaround plan… so that as you do your corporate plan, we know on what business we are assessing you.”
BUSINESS REPORT