1 00:00:00,120 --> 00:00:03,320 Speaker 1: Some questions being asked about the true financial health of 2 00:00:03,520 --> 00:00:07,240 Speaker 1: SAA due to release it's twenty twenty six financial reports soon. 3 00:00:07,280 --> 00:00:09,560 Speaker 1: But it turns out there may be some issues with 4 00:00:09,680 --> 00:00:13,480 Speaker 1: its twenty twenty five financial report, including the fact that 5 00:00:13,520 --> 00:00:16,400 Speaker 1: words like millions and billions seem to have been meddled up, 6 00:00:16,880 --> 00:00:19,960 Speaker 1: some numbers changed during the report, and all of this 7 00:00:20,120 --> 00:00:22,680 Speaker 1: might actually mean that instead of making a profit, it 8 00:00:22,760 --> 00:00:25,360 Speaker 1: might be making a loss. The questions come from doctor 9 00:00:25,440 --> 00:00:28,960 Speaker 1: Guy Leach's aviation analyst, and before I start this conversation, 10 00:00:29,040 --> 00:00:31,440 Speaker 1: let me just stress we'll hear a guy out, and 11 00:00:31,480 --> 00:00:35,000 Speaker 1: then of course we'll offer SAA a right of reply. Guy, 12 00:00:35,040 --> 00:00:37,200 Speaker 1: good evening and thanks for your time. You went through 13 00:00:37,240 --> 00:00:39,520 Speaker 1: the report. What problems have you found? 14 00:00:40,200 --> 00:00:41,960 Speaker 2: Yeah, I steven A nice to be with you as 15 00:00:41,960 --> 00:00:43,800 Speaker 2: all those well, I mean, we started sort of just 16 00:00:44,120 --> 00:00:46,400 Speaker 2: going through it as a sort of a matter of routine, 17 00:00:46,720 --> 00:00:49,240 Speaker 2: and then you kind of find these little jarring things, 18 00:00:49,280 --> 00:00:51,080 Speaker 2: and then of course look at a little bit more 19 00:00:51,080 --> 00:00:53,280 Speaker 2: and a little bit more you keep finding. We kept 20 00:00:53,280 --> 00:00:57,880 Speaker 2: finding these extraordinary inconsistencies. And the question which came to 21 00:00:57,960 --> 00:01:01,360 Speaker 2: front of mind pickus was well, what profit did the 22 00:01:01,360 --> 00:01:04,640 Speaker 2: airline actually make it in and the more we dug, 23 00:01:04,680 --> 00:01:06,720 Speaker 2: the more we found that there were actually four different 24 00:01:06,800 --> 00:01:10,720 Speaker 2: possible profit numbers, of which most notably that it was 25 00:01:10,720 --> 00:01:14,600 Speaker 2: probably one hundred and fifty five billion round loss or thereabouts, 26 00:01:14,840 --> 00:01:20,400 Speaker 2: because operating costs significantly exceeded revenue, so any claim for 27 00:01:21,240 --> 00:01:25,520 Speaker 2: making a profit was obviously immediately examined or questioned. And then, 28 00:01:25,560 --> 00:01:29,000 Speaker 2: of course we just started seeing more and more worm 29 00:01:29,080 --> 00:01:33,760 Speaker 2: looking like things in the woodwork, including the disposal of 30 00:01:33,920 --> 00:01:37,760 Speaker 2: significant what I call families saw their assets, like the 31 00:01:37,840 --> 00:01:42,440 Speaker 2: slotted heathtrow and so on. So the whole thing began 32 00:01:42,480 --> 00:01:44,080 Speaker 2: to look like it had made a loss and not 33 00:01:44,160 --> 00:01:44,640 Speaker 2: a profit. 34 00:01:45,319 --> 00:01:48,600 Speaker 1: Are they really mistakes about things like millions and billions? 35 00:01:48,640 --> 00:01:50,840 Speaker 1: I mean that's a substantial mistake. 36 00:01:51,880 --> 00:01:54,080 Speaker 2: Well, to give them their due, I mean it could 37 00:01:54,080 --> 00:01:56,920 Speaker 2: have been more like a punctuation mistake, in that what 38 00:01:57,000 --> 00:01:59,320 Speaker 2: should have been either a pommer or a space in 39 00:01:59,400 --> 00:02:02,480 Speaker 2: terms of set radio numbers, was actually a decimal. And 40 00:02:02,520 --> 00:02:05,720 Speaker 2: then you say, if you're write the nine decimal sixty three, 41 00:02:06,080 --> 00:02:08,280 Speaker 2: and then you write million after it is that you 42 00:02:08,320 --> 00:02:12,320 Speaker 2: know nine nine thousand, unity thousand million, or is a 43 00:02:12,320 --> 00:02:16,080 Speaker 2: bit of nine billion? Those are relatively minor issues in 44 00:02:16,120 --> 00:02:19,320 Speaker 2: the overall schema thing. The real committed gritting is what 45 00:02:19,360 --> 00:02:22,600 Speaker 2: are the actual financials hiding and what do they actually show? 46 00:02:23,120 --> 00:02:25,160 Speaker 2: And you know, as I said, the more I looked 47 00:02:25,200 --> 00:02:28,880 Speaker 2: at it, the more questions were that arose. 48 00:02:29,160 --> 00:02:31,000 Speaker 1: Before you went public with us. I mean, I presume 49 00:02:31,000 --> 00:02:32,840 Speaker 1: you got in touch with them and ask them questions 50 00:02:32,840 --> 00:02:34,959 Speaker 1: about it. What did they say to you in response? 51 00:02:35,800 --> 00:02:38,160 Speaker 2: Yeah, I gave them three or four days together to 52 00:02:38,160 --> 00:02:40,760 Speaker 2: give a reply. And I'm afraid that I really felt 53 00:02:40,800 --> 00:02:42,959 Speaker 2: that I just put a brush off in that they said, 54 00:02:42,960 --> 00:02:44,720 Speaker 2: I'm sorry, we're too busy for that sort of stuff. 55 00:02:44,800 --> 00:02:49,200 Speaker 2: Right now, I have had the new head of corporate 56 00:02:49,360 --> 00:02:52,799 Speaker 2: media relations, but on my case now, right before we 57 00:02:52,919 --> 00:02:56,720 Speaker 2: phoned saying, oh they're inaccuracies and what you're saying, And 58 00:02:57,600 --> 00:03:00,720 Speaker 2: of course you know he's talking that the numbers were 59 00:03:00,760 --> 00:03:03,320 Speaker 2: not exactly what they were supposed to be. By the way, 60 00:03:03,360 --> 00:03:08,640 Speaker 2: he also points out that the CFO and the acting CFO, 61 00:03:09,160 --> 00:03:13,320 Speaker 2: it didn't result, it wasn't forced out over her retirement 62 00:03:13,400 --> 00:03:17,480 Speaker 2: was overdue possibly who knows, But the reality is that 63 00:03:17,720 --> 00:03:20,799 Speaker 2: in terms of a pure analysis of the factors presented 64 00:03:21,120 --> 00:03:23,880 Speaker 2: in the annual report, it would strongly suggest that the 65 00:03:23,919 --> 00:03:28,400 Speaker 2: airline is not upbeaiding profitably and not oubreating sustainably. So 66 00:03:28,440 --> 00:03:30,760 Speaker 2: then we need to look at the twenty twenty four year, 67 00:03:31,000 --> 00:03:34,920 Speaker 2: where also it was forced to restate a claimed profit 68 00:03:35,280 --> 00:03:37,880 Speaker 2: into a very significant loss in the order of four 69 00:03:37,920 --> 00:03:41,000 Speaker 2: hundred and fifty five million round or so. So we're looking, 70 00:03:41,080 --> 00:03:43,240 Speaker 2: in my opinion, at two years of losses. 71 00:03:43,880 --> 00:03:47,080 Speaker 1: Sure, I mean the idea that someone I mean, I 72 00:03:47,160 --> 00:03:49,560 Speaker 1: presume it was an acting chief financial officer, and they 73 00:03:49,640 --> 00:03:51,760 Speaker 1: prepared the report, and they turned out to be mistakes 74 00:03:51,760 --> 00:03:54,160 Speaker 1: in the report, and then they leave. I mean, I 75 00:03:54,240 --> 00:03:56,960 Speaker 1: realized I'm a cynic and I live in a cynical 76 00:03:56,960 --> 00:04:00,520 Speaker 1: space in a cynical time. But quite often these things 77 00:04:00,560 --> 00:04:03,640 Speaker 1: do follow one after the other. You've been told it 78 00:04:03,680 --> 00:04:04,440 Speaker 1: was retirement. 79 00:04:04,520 --> 00:04:09,160 Speaker 2: Rather well, that's what the airline is maintaining, but certainly 80 00:04:09,200 --> 00:04:13,720 Speaker 2: the timing is extraordinarily bad. The last time that one 81 00:04:13,760 --> 00:04:18,160 Speaker 2: time you would think that a CFO would not suddenly leave, 82 00:04:18,520 --> 00:04:20,400 Speaker 2: would be righted that in the last day of the 83 00:04:20,440 --> 00:04:23,240 Speaker 2: financial year, when all the work really begins in terms 84 00:04:23,279 --> 00:04:25,640 Speaker 2: of getting the financial results out. I need to buy 85 00:04:25,680 --> 00:04:27,480 Speaker 2: the point out, by the way, though, that this annual 86 00:04:27,520 --> 00:04:30,960 Speaker 2: report for twenty five twenty twenty five was only released 87 00:04:31,279 --> 00:04:34,159 Speaker 2: in February, and no doubt one of the reasons for 88 00:04:34,200 --> 00:04:38,240 Speaker 2: that is that the Auditor General has not just issued 89 00:04:38,279 --> 00:04:42,039 Speaker 2: a qualification, but they've displained large parts of it, which 90 00:04:42,080 --> 00:04:46,120 Speaker 2: is the far greatest sanction or criticism if you like, 91 00:04:46,520 --> 00:04:49,600 Speaker 2: of the whole accounting process. Then simply a qualification. 92 00:04:50,040 --> 00:04:54,320 Speaker 1: Okay. So if all of this is true, and Essay 93 00:04:54,320 --> 00:04:57,000 Speaker 1: is making a loss, and on the picture you've painted 94 00:04:57,000 --> 00:05:00,520 Speaker 1: that seems likely, then who's paying for the loss? They 95 00:05:00,640 --> 00:05:04,440 Speaker 1: still own by government despite the sort of chart the 96 00:05:04,480 --> 00:05:06,200 Speaker 1: attempt to sell half of the door. 97 00:05:07,040 --> 00:05:09,320 Speaker 2: Yeah. Well, on page ninety four of the annual report 98 00:05:09,320 --> 00:05:12,359 Speaker 2: there's an incredibly cryptical little entry which says that the 99 00:05:12,400 --> 00:05:16,520 Speaker 2: airline issued a billion rand's worth of shares and who 100 00:05:16,560 --> 00:05:19,040 Speaker 2: would have sold at shares to you? Well, only the shareholder, 101 00:05:19,720 --> 00:05:21,680 Speaker 2: and the shareholder is a state of the government. So 102 00:05:21,880 --> 00:05:25,839 Speaker 2: presumably a million round changed hands somewhere. Again, SAA was 103 00:05:26,120 --> 00:05:28,240 Speaker 2: on the phone to me just before this interview, so no, 104 00:05:28,320 --> 00:05:30,320 Speaker 2: but they didn't get any of that money. Maybe advent 105 00:05:30,440 --> 00:05:33,000 Speaker 2: to the business Rescue. I'm far from convinced of that, 106 00:05:33,080 --> 00:05:36,760 Speaker 2: because Business Rescue was settled. And by the way, too, 107 00:05:38,640 --> 00:05:43,279 Speaker 2: I have a fairly reliable report that two billion rands 108 00:05:43,279 --> 00:05:47,080 Speaker 2: on in the draft budget for the medium term policy 109 00:05:47,120 --> 00:05:51,320 Speaker 2: budget as a loan for SAA. Presumably that comes through 110 00:05:51,360 --> 00:05:57,200 Speaker 2: the woodwork in about October this year. So yeah, they 111 00:05:57,440 --> 00:06:01,760 Speaker 2: have been raising money from different sources. They for for instance, 112 00:06:01,760 --> 00:06:04,880 Speaker 2: from sending the East spots, and they did have a 113 00:06:04,920 --> 00:06:09,200 Speaker 2: significant little cash war chest, if you like, left over 114 00:06:09,240 --> 00:06:13,120 Speaker 2: from the business rescue process. So they've been beniging to 115 00:06:13,120 --> 00:06:16,760 Speaker 2: get along without having cap in hand to the government, 116 00:06:16,800 --> 00:06:19,760 Speaker 2: to the taxpayer. But whether that's sustainable or not. 117 00:06:19,640 --> 00:06:22,840 Speaker 1: To be the case, doctor guy Leach, thank you so much, 118 00:06:22,920 --> 00:06:27,279 Speaker 1: the aviation analyst, or just to reiterate, we will ask esday, 119 00:06:27,360 --> 00:06:30,919 Speaker 1: we will offer them a right of reply, and I 120 00:06:30,920 --> 00:06:34,560 Speaker 1: mean in a way, and this happens, I'm afraid with entities. 121 00:06:35,160 --> 00:06:38,360 Speaker 1: You will see a person asking questions, as Guy Leach 122 00:06:38,400 --> 00:06:40,640 Speaker 1: has done, Doctor Leach has done in this case, they 123 00:06:40,640 --> 00:06:42,719 Speaker 1: get a kind of brush off. You'll find then that 124 00:06:42,800 --> 00:06:45,520 Speaker 1: they publish and then the person is very upset that 125 00:06:45,600 --> 00:06:48,440 Speaker 1: you published this. And it seems to me almost that 126 00:06:48,560 --> 00:06:51,279 Speaker 1: this might well have happened in this case. As I say, 127 00:06:51,640 --> 00:06:54,120 Speaker 1: happy to hear the other side on the Money Show. 128 00:06:54,160 --> 00:06:58,279 Speaker 1: I think it's a if they have disputes with doctor Leach, 129 00:06:58,360 --> 00:07:00,800 Speaker 1: oh him a proper response too, so that he can 130 00:07:00,839 --> 00:07:04,080 Speaker 1: properly report on that. But clearly something very interesting going on.