The government has put a halt to SA Express’s business rescue practitioners plans to ground the ailing state airline.

SA Express was placed in business rescue last month after failing to settle its debt of R11m to global logistics firm Ziegler. It is the second state-owned airline to be placed in business rescue.

The business rescue process is aimed at rehabilitating a financially distressed company by restructuring its affairs, including debt.

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 said was swallowed by historical debt.

On Friday, the department of public enterprises said its acting director-general Kgathatso Tlhakudi met with the business rescue practitioners Phahlani Mkhombo and Daniel Terblanche this week, where the business rescue plan was presented. 

The department said Mkhombo and Terblanche were planning to ground the airline without first presenting the shareholders and stakeholders with a comprehensive and feasible business case for the immediate stabilisation of SA Express. 

The business rescue practitioners were told by the department that the plan was “wholly inadequate” and did not include key commercial elements that would enable public enterprises to make a business case for the provision of the post-commencement finance (PCF) to the National Teasury. 

PCF is finance provided to a company once business rescue proceedings have started, which enables it to continue while a rescue plan is put in place.

“The department is of the view that there is still a rationale for SA Express to play a critical role as a feeder airline to service secondary routes and key cities in the Southern African region; however, the practitioners, with board and management, need to firm up the commercial case to enable funders to provide PCF,” it said. 

The department said it understands that the business rescue process needs PCF to be fully operational. However, the department had communicated to the practitioners that it is engaging with the Treasury to seek the PCF either in the form of a government guarantee or cash injection. 

“The department has impressed upon the business rescue practitioners that the fiscus is constrained and, notwithstanding the National Treasury, is fully engaged on the matter and understands the severity of the situation,” it said.

The department said in this regard that if there was a strategic equity partner interested in investing in the airline, this option should be “vigorously pursued”.

A work session was planned for Friday to discuss the PCF, it said. 

The department said the practitioners have also agreed to devolve some operational and strategic responsibilities to the airline management and board. This after they were advised to engage all stakeholders, the unions, board and management, and tap into some of the skills already available at SA Express, so they could develop a business case that could be proposed to  potential PCF providers, including the Treasury.


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