South African Airways (SAA) is facing renewed scrutiny after its latest financial results revealed that much of its reported profitability may not stem from core airline operations.
The state-owned carrier declared a net profit of R155 million for the 2024–25 financial year, alongside an operating profit of R336 million and revenue of R9.266 billion. The airline attributed this performance to improved passenger volumes, expanded routes, and a higher load factor, signalling a recovery after years of turbulence.
However, a closer examination of the annual report suggests that the turnaround may rely heavily on non-operational factors.
Asset disposals and state support drive results
A significant portion of SAA’s earnings was generated through the disposal of assets, including property, aircraft, equipment, and intangible assets. These transactions contributed approximately R1.169 billion in gains.
Without these once-off gains, the airline’s financial position would look markedly different. Instead of reporting a pre-tax profit of R173 million, SAA would have recorded an underlying loss of nearly R996 million, raising concerns about the sustainability of its business model.
Further complicating the picture is a capital injection of more than R1 billion from the South African government, executed through the issuance of new shares. While the Department of Transport maintains that no direct funding has been provided since 2023, analysts argue that the transaction effectively mirrors a bailout.
Economist Dawie Roodt described the distinction as “semantic”, noting that issuing shares is a conventional method of raising funds.
This follows a pattern observed in previous years. In 2023, SAA recorded a R3.784 billion gain from property revaluation, significantly boosting its balance sheet.
Audit concerns and governance questions emerge
The credibility of SAA’s financial reporting has also been challenged by the Auditor-General of South Africa. Auditor-General Tsakani Maluleke issued a disclaimer opinion on the airline’s financial statements, indicating that sufficient audit evidence could not be obtained to verify key figures.
Such an outcome represents one of the most severe audit findings for a public entity and raises serious concerns about transparency and accountability.
Additional issues highlighted in the report include more than R500 million in irregular expenditure, with limited disclosure regarding investigations or corrective action.
Operationally, while SAA reported a load factor of 65% and increased passenger numbers, its airline EBITDA remained negative at R443 million, falling short of its target of a positive R241 million.
The airline’s challenges are not new. SAA entered business rescue in 2019 after years of financial losses and repeated government bailouts. Efforts to introduce private investment, including the proposed Takatso consortium deal, have yet to deliver a long-term solution.
Despite these concerns, executive remuneration increased significantly, with CEO John Lamola receiving a 23% salary increase to R4.7 million.
As SAA continues to position itself as a recovering national carrier, questions remain about whether its financial stability is genuine or still dependent on state support and accounting adjustments.
Source: The Citizen
