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SAA, SA Express and Transnet miss targets

Cape Town - The public enterprises department missed about a third of its performance targets for the past financial year, notably goals related to the struggling state-owned airlines and Transnet.

In the department's annual report tabled in parliament on Thursday, Auditor General (AG) Terence Nombembe blamed lapses in strategic planning for public enterprises falling short on 26 of 81 targets for 2012/13.

In the case of SA Express, the troubled regional state-owned airline, the department failed to complete the assessment of its annual report and its corporate plan.

SA Express failed to submit the latter after its finances fell into such disarray that its accounts were handed over to the AG last year.

Public enterprises said in its report that further discussions with SA Express were necessary to fine-tune a market demand strategy. This was echoed on Wednesday by SA Express chairperson Andile Mabizela, who reportedly said the carrier had to consider how it could capitalise on opportunities in Africa.

Public Enterprises Minister Malusi Gigaba confirmed earlier this month that the state was planning to integrate SAA, SA Express, and low-cost airline Mango as separate brands into a single holding company as part of the long-awaited turnaround plan for SAA.

The annual report states that the department failed to determine and implement appropriate capital structures for SAA and SA Express.

It said it gave priority to the turnaround plan and the need to "maintain going concern status of the airlines".

The capital structures assessment would form part of the development of the turnaround plan, to be concluded in the current financial year, the report added.

Announcing the plan a fortnight ago, Gigaba declined to put a figure on the state funding that would be required to keep SAA in the air or to give a deadline for a return to profit.

SAA reported a loss of R1.25bn last year and is being kept alive by a R5bn National Treasury guarantee.

SA Express this week reported a profit of just R650 000 after posting a loss of more than R300m last year.

According to its annual report public enterprises failed to agree to a shareholder compact with Transnet after disagreeing with the freight company's plans to budget for a financial loss.

Transnet has undertaken an ambitious seven-year, R301bn capital expansion programme, of which it is funding two-thirds from cash generated from its operations.

The AG gave public enterprises an unqualified opinion but faulted it for lacking reliable back-up information for its financial reports.


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