Future of SA Express still in limbo despite high court granting liquidators crucial reprieve
On Wednesday 9 September, Judge Pieter Meyer postponed a hearing for the possible final liquidation of SA Express, buying the airline’s liquidators more time to conclude the sale of the airline as a going concern.
The High Court in Johannesburg has granted the liquidators of SA Express an extension of nearly two months to conclude talks with potential investors to sell the state-owned airline, averting (for now) the worst-case scenario of a final liquidation.
A final liquidation would imply the death of SA Express after 26 years in the skies – its operations would permanently close, 691 workers would be laid off and a fire sale of its assets would ensue to pay creditors that are owed more than R2.5-billion.
SA Express is fighting for survival after the high court placed it under provisional liquidation on 28 April following the failure of its business rescue process. The former business rescue practitioners, Phahlani Mkhombo and Daniel Terblanche, declared that SA Express had no reasonable prospects of rescue after it had completely run out of cash and had no financial support from the government.
On Wednesday 9 September, Judge Pieter Meyer postponed a hearing for the possible final liquidation of SA Express to 28 October, buying the airline’s liquidators more time to conclude the sale of the airline as a going concern. It was the second postponement granted by the high court. On 9 June, the court granted Aviwe Ndyamara, one of the SA Express liquidators, a three-month postponement to 9 September to conclude talks with potential investors in the airline. The talks have not yet yielded demonstrable progress or finality.
In court papers that argue for the latest extension, Ndyamara said “there is a pending sales process” of the airline – a process that might be concluded on 6 October. Ndyamara didn’t disclose further details about the sales process, the interested parties, or the type of investment that potential investors are willing to conclude in SA Express. Any sale of SA Express has to receive support from the government (the Department of Public Enterprises and National Treasury), which is the sole shareholder in the airline.
Business Maverick recently reported that at least 17 private sector investors have approached Ndyamara to either purchase SA Express’ aviation assets or entire operations by taking over the government’s shares in the airline.
Rallying around SA Express
Ndyamara’s latest request for an extension was supported by Mkhombo and Terblanche (former business rescue practitioners), and trade unions representing SA Express workers, including the National Union of Metalworkers of SA and South African Cabin Crew Association.
The unions have thrown another complexity to the liquidators and high court, saying that Parliament should first repeal the SA Express Act before the airline can be placed under final liquidation. This act relates to the mandate of the airline operating flight routes that serve SA’s smaller cities and support the domestic tourism industry.
In an affidavit that details his support for the extension, Terblanche said a final liquidation would be a blow for efforts to sell SA Express, as it would be forced to relinquish its aviation licences and certifications to the aviation authority.
Without the licences and certifications, which allow SA Express to conduct commercial air transport operations, the airline would be rendered as worthless by any potential investor.
“If the airline is to be placed in final liquidation, the certificate will have to be surrendered and this will water down prospects of creating value for creditors as the assets of SA Express may have to be sold haphazardly, which will not create sufficient value for creditors.
“The extension will allow the liquidators of SA Express to conclude the sales process without compromising the licences and accreditations that the airline currently has in place,” Terblanche said in court papers.
But for 691 SA Express workers, who have gone without full salaries or retrenchment packages for six months, the extension means that they are uncertain about the future of the airline. And they have to wait until October for more clarity. DM/BM
Daily Maverick © All rights reserved