An SA Express aircraft. Picture: GALLO IMAGES/GETTY IMAGES/BRIAN BAHR
An SA Express aircraft. Picture: GALLO IMAGES/GETTY IMAGES/BRIAN BAHR

SA Express on Thursday became the second state-owned airline to go under business rescue after failing to settle a multimillion-rand debt owed to a contractor.

South Gauteng High Court judge EF Dippenaar ruled that the airline be placed under business rescue for failing to settle its debt of R11m to global logistics firm Ziegler SA.

In September 2019, SA Express received a government bailout of R300m to ease its operational and financial challenges. In 2018 it was granted a R1.2bn guarantee, which the airline reportedly said was swallowed by historical debt.

“SA Express is much sicker than SAA. In fact, it’s been sicker for the longest of times and should have been put into business rescue way before SAA,” said Guy Leitch, an aviation expert and editor of both SA Flyer and FlightCom magazines.

He said SA Express, which services several smaller regional routes as a feeder to SAA, is “completely not viable. It’s extraordinary that it continued operating all these years.” 

SA Express said it had instructed its attorneys to apply for leave to appeal the ruling.

“I’m surprised that they will appeal the ruling. I don’t know whether it’s a delaying tactic or they have a properly held opinion that being in business is better than being placed under business rescue,” said Leitch.

The SA Express contract with Ziegler was an agreement to provide a range of services, including cargo management, customs clearing and inventory, and supply chain management.

The airline, however, has previously argued that there was no need to place it under business rescue because the contract with Ziegler, which was signed by former CEO Inathi Ntshanga in 2017, was irregularly obtained and had raised red flags when reviewed by new management.

Dippenaar ruled on Thursday that “SA Express is placed under supervision ... and business rescue proceedings [must] commence”. 

The judgment reads: “Daniel Terblanche and Phalani Mkhombo are appointed as the joint interim business practitioners of SA Express.”

SA Express spokesperson Mpho Majatladi said the court “went over and above what it was required and granted orders not sought by the applicant”.

“The court has also not made any order on whether the matter was urgent or not, in circumstances when the urgency was specifically opposed. The company has instructed its attorneys to apply for leave to appeal, which leave will be filed as soon as it is considered and settled by senior counsel.”

Department of public enterprises spokesperson Richard Mantu said they could not comment on the matter as SA Express has indicated its intention to appeal. 

SA Cabin Crew Association (Sacca) president Zazi Nsibanyoni-Mugambi said they were disturbed that another state-owned airline has gone into business rescue. 

SAA recently received a R3.5bn loan from the Development Bank of Southern Africa (DBSA), which enabled it to continue flying, while business-rescue practitioners prepare to restructure the company into what is hoped will be a sustainable business.

“We cannot continue to pretend like this is not a crisis. We are in crisis and it needs urgent intervention,” said Nsibanyoni-Mugambi.

The judgment articulated the many years of corruption, mismanagement and rot within SA Express, she said.

Sacca will represent its members during the business-rescue process to make sure that jobs are saved because “the unemployment rate in SA is climbing at an alarming rate, we cannot afford for any [more] jobs to be lost.

“We call on [the] shareholder to make very serious, drastic decisions in appointing capable boards and management that is able to help these airlines [SAA and SA Express] going forward.” 

mkentanel@businesslive.co.za

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.