South African Airways (SAA) reported a loss of R150 million for the first three months of the 2024 financial year, against an expected loss of R182 million.
The National Treasury revealed this in its report to Parliament’s Standing Committee on Appropriations on Tuesday.
SAA Technical was the only subsidiary to report a profit of R4.4 million, while its other subsidiaries reported losses – including Mango, Air Chefs, and SAA itself.
The company’s total revenue of R1.1 billion was 22% less than the budgeted R1.4 billion due to lower demand for domestic and regional travel over the last three months.
National Treasury estimated the average load factor for the first quarter was 60% for domestic travel and 49% for regional travel.
Furthermore, SAA cancelled flights in June due to aircraft maintenance and the unavailability of spare aircraft.
The entity underspent by 25% on operational expenses, but the costs incurred were still higher than the revenue generated.
Operating costs were R17 million. The reasons for increased operating costs were a R2.6 million SARS penalty for late submission not budgeted for and a labour cost of R5.2 million higher than budgeted.
Material cost was R14.6 million higher than budgeted due to subcontracting costs and freight charges. However, energy costs were R4.7 million below budget.
Mango has been under voluntary business rescue since July 2021 and has not flown since.
Air Chefs generates approximately 80% of its revenue from SAA and also supplies in-flight catering to Mango. The entity realised a loss of R1 million, mainly due to increased expenses.
SAA’s reported profit has been called into question before. It reported a profit of R500 million for the year ended March 2023 versus a budgeted loss of R740 million.
This profit comprised mainly of consolidation entries, which totalled R505 million. SAA only turned a profit of R31 million.
When asked by The Citizen how SAA turned a profit and details of the R505 million worth of consolidation entries, the Treasury refused to answer. Instead, it directed the publication to SAA and the Department of Public Enterprises.
The National Treasury also refused to disclose whether the state-owned carrier posted a net or an operating profit.
SAA directed reporters to its annual financial statements, which are set to come out later this year. The Department of Enterprises said they would only comment after an audit of the financial statements has been conducted.
SAA has not released annual financial statements for the last five years.
The fact that SAA posted a profit is even more miraculous given that the Treasury said in its half-year report to Parliament in February that SAA reported a R50 million loss for the half-year.
SAA Technical also miraculously turned from posting a R2.7 million loss in the first six months of the financial year to posting a profit of R84.4 million
Considering SAA Technical’s only regular customer is SAA, with a fleet of seven aircraft, experts doubt that the subsidiary could break even – let alone turn a profit.
Moreover, when the company exited business rescue, it had 1,200 employees, and within 18 months, this ballooned to over 2,000 employees. This would normally reflect an increase in operating expenses.