South African aviation industry, which is also one of the regions largest carrier is facing challenging setbacks, including the current state of the SA Express—which is state-owned, which just slid from a liquidation process, as a judge granted its three-month delay, pending anticipated government intervention, according to information Reuters.
Saved by the possibility of an investor
After several rescue attempts, June 9 was the set court date—hence, due to the possibility of a potential investor—which the National Union of Metalworkers of South Africa and the South African Cabin Crew Association (SACCA) claim to have an investor from the United Arab Emirates potentially interested in buying a stake in SA Express, the issue has been postponed until September 9, according to information from News24.
According to the laws of South African regarding foreign ownership in domestic airlines, the “potential” investor is limited to 25 per cent. Hence—as the unions did not disclose the identity of the potential UAE investors, they remain committed to trying to save both SA Express and flag-carrier South African Airways, which is in business rescue, as well as saving jobs.
Reuters reported that SA Express administrators lawyers asked the High Court to delay a hearing on whether it should be finally liquidated, citing a letter from the state enterprises ministry that referred to an allocation of around $10 million in the fiscal year that began in April, subject to certain conditions.
They argued that was a sign that the “government is contemplating a form of ‘restart’ for the operations of the airline” and that delaying the hearing would allow “national executives to roll out proper plans”.
The airline workers are underwater as their contracts have been suspended in terms of the Insolvency Act.
“We understand the frustration of employees at SA Express who have not had an income since the end of February and have been protesting out of frustration. This is why we are doing everything possible to find alternatives to liquidation because we know it would worsen the situation for workers and their families.”
Currently, only 16 million people have jobs in South Africa, and the South African Airways (SAA) proposal to the government for $1.2 billion as a bailout assist to resume flying could reignite confidence in the sector.
Mixed feelings about SA Express
However, on Tuesday, Parliament’s Standing Committee on Public Accounts was unimpressed that SA Express provisional liquidator, Aviwe Ndyamara of the Tshwane Trust Company, was not available for a scheduled meeting to brief them on the state of affairs at the airline, according to News24.
The committee voted in favour of obtaining parliamentary legal advice regarding the option of using subpoenas to compel the provisional liquidator to brief Parliament if need be.
Further, the state has provided more than $ 73 million in urgent financial support to SA Express for the 2019/20 financial year, including R300 million released last October.
Hence—as the business rescue plan came under scrutiny, as it was found being inadequate of a credible business case to allow further funding, still the Department of Public Enterprises (DPE) is open developments on the matter, according to information from News24.
If SA Express goes into final liquidation, all its assets would have to be sold and outstanding debts collected so that affected parties can be paid in order of preference in terms of the act.
The DPE said it notes the extension of the court date and will continue to work with all the stakeholders