Is South African Airways Headed For a Crash Landing?
AS South African Airways (SAA) is down to the last R99m it can borrow against government’s guarantee‚ it should be "placed under business rescue"‚ the DA said on Thursday.
The party made this claim in the wake of a court this week ordering SAA to pay R104m plus interest to Nationwide Airlines for anticompetitive conduct‚ and reports that the cash-strapped airline might face a further court bill from a similar claim by Kulula’s owner‚ Comair.
DA finance MP Alf Lees described the ruling as "just another nail in the beleaguered airline’s financial coffin".
"The judgment has set precedent‚ which should be of concern to the National Treasury and Minister of Finance‚ Pravin Gordhan‚ as Comair is seeking damages in excess of R1bn in litigation, based on similar circumstances‚" said Lees.
"This is certain to plunge SAA into further financial disarray‚ necessitating the need for the airline to be placed under business rescue."
Lees put the total of the Nationwide award at R140m – "once interest charges are added" – and said that "SAA now has no wriggling room left‚ as the remaining R99m that it can borrow against the R15bn government guarantee is not enough to meet the Nationwide judgment".
"R140m added to the leaked first quarter loss of R1.3bn means that SAA will in all likelihood start defaulting on creditor payments‚" he said.
"The Nationwide liquidators do not have the burden of President (Jacob) Zuma holding them back and they will be forced to file for the liquidation of SAA should the inevitable happen and SAA are unable to honour the R140m compounded by this court order."
This article was first published on BusinessDayBDlive