SAA swings into R354 million loss but claims improved financial health

South African Airways (SAA) has declared a loss of R354 million for the 2023/24 financial year while simultaneously announcing a "debt-free, asset-rich balance sheet" that’s poised to support its recovery as a global aviation brand.

CEO John Lamola portrayed these results as a snapshot of resilience, highlighting the airline's notable increase in revenue and operational efforts despite external pressures.

In the audited financial results reflecting the airline’s second year of operations since its exit from business rescue in April 2021, SAA on Thursday reported that it had generated revenue of R7 billion, a 23% year-on-year increase for the group.

However, currency fluctuations and various ‘external’ factors impacted operations, resulting in a net loss of R354m for the year. The group reported a profit of R210m the previous year.

The latest financial statements were the last of the outstanding audits from the business rescue period, with all prior-year adjustments now resolved.

These include SAA recognising a gain of R431m in the current year by de-recognising business rescue credit obligations and recording the amount as sundry income.

The group’s auditors said this amount should have been recognised as a prior-period adjustment to retained earnings, instead of sundry income in the current year.

Due to this correction, the airline’s net result was restated from a small profit of R60m to a loss of R371m. 

Lamola said the results detailed a phase of intense uncertainty in the resuscitation of SAA as the assumption of the company’s control by the strategic equity partner was awaited.

“Since then, we have entered a period of structured and strategic reconstruction of the business, focusing on institutionalising robust governance and management systems, whilst implementing plans on aircraft fleet and route network expansion and elevation of customer experience,” he said.

SAA said that outside of a R415m foreign-currency translation loss because of the rand’s volatility, the final result also reflected external factors including the impact of Russia’s invasion of Ukraine, which pushed jet fuel costs from R1.3bn to R1.9bn during the period.

It was also hit by a global shortage of aircraft, which increased leasing costs by more than 30%. 

These elements negatively affected revenue and earnings before interst tax depreciation and amortisation (EBITDA) , with the latter declining from a positive R436m in the prior year to a negative R90m.

The group noted that its cash and cash equivalents remained strong at R1.4bn with zero borrowings and R6.4bn in equity.

“The FY2023/24 results reflect significant progress in SAA’s financial health. We have strengthened the channels of our revenue streams and cost containment measures,” Lamola said. 

The number of flights flown also jumped by 42%, with a significant increase in flights into Africa and routes from Johannesburg and Cape Town to Sao Paulo starting in the second half of the financial year.

SAA said to improve its financial reporting, the board launched an Audit Health Plan that standardises key controls, expands internal audit capacity and improves collaboration with external auditors.

BUSINESS REPORT