SA Express to appeal business rescue judgment
SA Express, which was ordered yesterday by the Gauteng High Court (Johannesburg) to go under business rescue for failing to settle its debt of R11m to global logistics firm Ziegler SA, is to appeal the ruling.
BusinessLIVE reports that 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 that the airline reportedly said was swallowed by historic debt.
SA Express services several smaller regional routes as a feeder to SAA, which was placed under business rescue in November, following a liquidity crisis. The airline has 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.
Judge EF Dippenaar yesterday ruled that 'SA Express is placed under supervision ... and business rescue proceedings (must) commence'.
'Daniel Terblanche and Phalani Mkhombo are appointed as the join interim business practitioners of SA Express,' the judgment read.
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.'
The ruling was important, as it showed that state-owned entities were subject to the Companies Act, according to Connie Mulder, head of Solidarity's Research Institute. By making the ruling, the court had ‘cemented its jurisdiction,’ he reportedly told Fin24. The report notes SA Express is in a battle with SAA for money it says it is owed by SAA. The flag carrier acts as its booking agent, but according to SA Express has not been transferring money from bookings to SA Express.
Meanwhile, SAA business rescue practitioners have taken the urgent decision to cancel all domestic flight routes, barring limited services between Johannesburg and Cape Town. This is part of its initiatives to create a more sustainable business as the airline undergoes a rehabilitation process, says a Moneyweb report.
From 29 February, all SAA flights to other local destinations – including Durban, East London and Port Elizabeth – will be cancelled. However Mango will continue to operate.
The move comes ahead of the release of the business rescue plan, which practitioners Les Matuson and Siviwe Dongwana will publish this month.
The plan should outline a comprehensive restructuring programme, after over two months of consultation with industry specialists, government, creditors and executive management. Regional and international routes will also be affected, with SAA closing routes from Johannesburg to Abidjan via Accra; Entebbe; Guangzhou; Hong Kong; Livingston; Luanda; Munich; Ndola; and Sao Paulo by the end of February.
‘SAA will continue to operate all international services between Johannesburg and Frankfurt, London Heathrow, New York, Perth and Washington via Accra,’ said the practitioners.
Regional services that will be retained include flights from Johannesburg to Blantyre, Dar es Salaam, Harare, Kinshasa, Lagos, Lilongwe, Lusaka, Maputo, Mauritius, Nairobi, Victoria Falls and Windhoek.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
