Brown urges recapitalisation of SA Express amid questions over waste

South African Express CEO Victor Xaba was forced to concede on Wednesday that the loss-making airline did not take firm enough action on irregular spending, after Public Enterprises Minister Lynne Brown reiterated that it needed a cash injection from the State.

“Let’s say in all fairness not enough was done in terms of consequence management. I just want to concede that, ” Xaba told Parliament’s watchdog Standing Committee on Public Accounts (Scopa).

He was answering questions on the Auditor-General’s findings that the low-cost state carrier had incurred R35-million in irregular and wasteful expenditure in 2015/16, and explained that the company had chosen to conduct one “over-arching” investigation rather than pursue individual cases.

MPs asked Xaba why so far only one employee had been fired and two faced action, when 216 cases of wrongdoing had been opened.

The Democratic Alliance’s Tim Breuteseth bluntly told Xaba he should expect the public to be dismayed that millions were misspent and there was no apparent haste to punish those responsible and recover the money, adding: “When are you resigning? Because you are not good at it.”

Brown briefly appeared at the committee before heading to a Cabinet meeting and said like South African Airways (SAA), SA Express needed recapitalisation and urged National Treasury “to help us” in that regard.

Unaudited financial results for 2016/17 show that the airline lost R234-million after making a slim profit of R16-million the year before.

CFO Mark Shelley told Scopa that the airline’s problems in paying its creditors in time persisted, despite receiving further government guarantees of R467-million.

“There is one root cause and that is liquidity,” he said.

“We would pay as and when funds were available… We still have liquidity issues and we still have issues of late payment.”

Asked why the guarantees did not resolve the problem, he said that it was extended specifically to enable the airline to pay “long-outstanding creditors” and those directly linked to operating aircraft.