Report of the independent auditors

To the members of South African Airways (Proprietary) Limited

We have audited the group and company annual financial statements of South African Airways (Proprietary) Limited which comprise the directors' report, the balance sheet and consolidated balance sheet at 31 March 2007, and the income statement and consolidated income statement, statement of recognised income and expenses and consolidated statement of recognised income and expenses and cash flow statement and consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 19 to 81 .

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the performance information in accordance with section 55(2)(a) of the Public Finance Management Act 1 of 1999 and the Companies Act of South Africa respectively. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. The audit was also planned and performed to obtain reasonable assurance that our duties in terms of section 27 and 28 of the Public Audit Act, 25 of 2004, have been complied with. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion the financial statements present fairly, in all material respects, the financial position of South African Airways (Proprietary) Limited and the group as at 31 March 2007, and of their financial performance and their cash flows for the year then ended in accordance with International Financial Reporting Standards, the Companies Act of South Africa and the Public Finance Management Act 1 of 1999, as amended, and the Public Audit Act, 25 of 2004.

Emphases of matter

Without qualifying our opinion above, we draw attention to the matters listed below.

Going concern

The directors have disclosed details of the group's intended restructuring programme on pages 20 and 26 of their report. The long-term sustainability of the airline is dependent on the successful implementation and approval of the restructuring plan.

Public Finance Management Act 1 of 1999 (PFMA) and Public Audit Act, 25 of 2004 (PAA)

We draw your attention to the disclosure of the group's PFMA non-compliance made on pages 24 and 25 of the directors' report.

Compliance with legislation relating to financial matters

South African Airways (Proprietary) Limited and the group have put processes and systems in place to identify all legislation applicable to it as well as a monitoring plan to ensure compliance with this legislation. As disclosed in the directors' report on page 25, as these systems are not yet fully implemented, the group cannot conclude that it has complied with all applicable legislation relating to financial matters, financial management and other related matters.

Deloitte & Touche

Andrew Mackie

Partner

APF Inc

Mahen Naidoo Partner

4 June 2007