SA Express can't prove to auditor-general it can survive a year
State-owned airline South African Express has been unable to satisfy the auditor-general that it can continue operating as a going concern for the next 12 months.
This was the reason given by Public Enterprises Minister Lynne Brown for the failure of the airline to table its annual financial statements for the 2016/17 financial year in Parliament before the end-September deadline. The airline only tabled its 2015/16 financial statements in the last few weeks.
The loss-making airline has already faced an application for liquidation by a creditor which it is contesting.
Brown wrote a letter to Speaker of the National Assembly Baleka Mbete explaining why SA Express would not be able to finalise its annual financial statements by end-September as required by the Public Finance Management Act.
"The annual report and annual financial statements will be tabled as soon as the going concern status of the airline has been resolved and the audit has been concluded‚" Brown said in her letter.
It is not clear whether resolving the going-concern problem will require further guarantees or a bail-out by the state.
Brown said that SA Express "is required to demonstrate its ability to continue operating on a going-concern basis for a period of at least 12 months after the signing of the annual financial statements by satisfying the solvency and liquidity test set out in section 4 of the Companies Act.
"SA Express has yet to satisfactorily demonstrate such ability to the auditor-general. As a result the audit cannot be completed in order to finalise the 2016/17 annual financial statements‚" she said.