South Africa's transport minister, Barbara Creecy, declined to discuss South African Airways' current financial status during a parliamentary oversight meeting, attributing the airline’s recent poor audit outcome to the "state capture" era, with criminal investigations ongoing at the airline.

Addressing the Portfolio Committee on Transport on April 21, Creecy said: "We are not answering questions on the current financial year. The books are closed. At this point, we are preparing for the audit, and it is normal at this point in time that we don't make public statements on the financial position." She added, "You will soon know what the position of the AG [Auditor-General] is on whether or not SAA remains a going concern."

The minister, along with a new SAA Group board appointed in August 2025, and new interim management, were summoned after the Auditor-General of South Africa issued a disclaimer of opinion on the group's results for the year ending March 31, 2025.

Lawmakers sharply criticised the company after the AG found its financial statements were not a "true reflection" of its financial position, citing incomplete registers, withheld information, and a culture of impunity that allowed employees "to act without consequence".

However, Creecy said the findings stem from historical corruption and that multiple criminal investigations are underway. "The root of the problems that we face lies in the state capture era," she said, referring to widespread state-sponsored corruption and cronyism under former president Jacob Zuma (2009-2018). She added that while the government supports consequences for irregular expenditure, the immediate priority is stabilising the company.

Committee members questioned why SAA has lacked a head of internal audit, calling the vacancy a key weakness in oversight and risk management. They urged action against those who "loot the money", criticising that no disciplinary measures had been taken and no funds recovered. The lack of accountability has contributed to rising "fruitless and wasteful expenditure", including interest and penalties linked to late payments to creditors.

SAA Group reported total revenues of ZAR9.2 billion rands (USD560 million), up 35.9% year-on-year. Net profit of ZAR155 million (USD9.4 million) included ZAR30 million (UDSD1.8 million) from the airline itself. It posted ZAR1.9 billion (USD115 million) in cash, with no long-term debt, and ZAR6.6 billion (USD401 million) in equity.

The improvement was driven largely by the sale of London Heathrow landing slots and higher passenger numbers. However, operating costs were ZAR9.6 million (USD583 million), a gap the auditor described as operationally unsustainable, warning that the underlying business remains fragile.

Tackling the rot

Newly appointed acting group CEO Matshela Seshibe said SAA was now "turning over every rock to ensure that we expose all areas of waste and potential inefficiencies in the business to drive productivity."

He emphasised that internal controls are now "non-negotiable", with multiple layers of oversight being established to ensure accountability.

Chairperson Sedzani Mudau said a "loss control committee" was established in March to investigate unnecessary and avoidable spending and implement preventative controls.

In addition, the new board has established a cost optimisation committee to review outsourced contracts, some of which were historically signed at "excessive prices" compared with industry benchmarks.

The airline group is undergoing an internal audit overhaul following the appointment of a chief audit executive in August 2025. New internal programmes are targeting irregular spending and weaknesses in supply chain management.

Mudau said the board aims to finalise the current financial year’s audit by the end of July 2026, allowing time for remedial action ahead of the next audit cycle.

However, she said it would take 12 to 36 months for the internal audit function to reach full compliance, with a clean audit targeted only after 2027. She noted that achieving a clean audit would first require an unqualified audit opinion from the AG, adding that while the 2026/2027 financial year is unlikely to produce a clean result, the immediate goal is to avoid another audit disclaimer.

Mudau acknowledged the airline is currently "behind the curve" due to manual record-keeping and is now prioritising the automation of backend systems.

She added that SAA is revising its key performance indicators under guidance from the AG, refocusing on core mandates and introducing active monitoring through board subcommittees to ensure targets are met.

Cash flow challenges

Mudau also flagged a major constraint on liquidity, saying ZAR1.1 billion (USD67 million) in SAA funds remain "stuck" in foreign countries due to exchange control restrictions, with more than 70% held in Zimbabwe.

Creecy has written to her Zimbabwean counterpart and escalated the matter to the South African Department of International Relations, with a small portion of the debt having been recently repaid.

While these funds are critical for the airline's working capital, the chairperson acknowledged that the audit disclaimer was hampering efforts to raise private financing for fleet modernisation.

The airline currently operates up to 20 aircraft and is facing liquidity pressure following a "fuel shock" linked to the conflict in the Middle East. To preserve cash, it is raising ticket prices and cutting frequencies on unprofitable routes, Mudau said.

Meanwhile, the company has launched a comprehensive group-wide strategy to optimise its working capital and tighten internal governance, added acting CFO Solach Pather.

The airline has more money owed to it than it owes, but cash is not coming in fast enough, so management is trying to tighten payment terms on both sides to avoid cash flow pressure.

Debtors currently owe between ZAR1.5 billion and ZAR1.7 billion (USD91-103 million), excluding maintenance reserves and prepayment deposits, while creditors are owed between ZAR800 million and ZAR900 million (USD48-55 million). The group is negotiating with suppliers to "enhance and optimise" working capital to meet funding needs, Pather said.

Revised corporate strategy

SAA Group is focusing on strengthening its subsidiaries by reducing reliance on the airline and diversifying revenue sources, Seshibe said. Catering subsidiary Air Chefs currently generates 70% of its business from the group and is now actively seeking external customers after losing key contracts during the COVID-19 pandemic.

Fleet growth remains a longer-term objective, but the immediate priority is stabilising operations. SAA is prioritising operational stabilisation while working on a revised corporate strategy that will set out its longer-term growth and sustainability plans, Seshibe said. The strategy will be presented to the parliamentary oversight committee, which has flagged the group as a key public entity requiring close monitoring.