SA Express liquidation

Photo: Bob Adams / Wikimedia Commons

SA Express liquidated: DA calls for SAA to suffer same fate

The airline has been unable to pay its staff since February, and business rescue practitioners couldn’t salvage the company from insolvency.

SA Express liquidation

Photo: Bob Adams / Wikimedia Commons

And now for something completely different – a trip down memory lane when state owned enterprise failure was at the tip of our collective concerns. 

The Democratic Alliance (DA) has welcomed the decision by Business Rescue Practitioners (BRPs) to liquidate the failed SA Express airline. 

The decision was taken to liquidate the second most popular airline in South Africa following interventions by BRPs to salvage the company from the depths of crippling debt and dire financial losses. 

BRPs Phahlani Mkhombo and Daniel Terblanche surrendered hope for the cash-strapped airline to take off once more and launched an urgent application at the Johannesburg High Court on Wednesday 25 March to liquidate the airline.

The airline owes R2.8-billion to creditors and preliminary claims submitted by creditors in the business rescue process amount to R173-million. 

Airline can’t pay salaries

Some 650 employees are set to lose their jobs, with the airline incapable of paying their salaries, and the airline has also not been able to make contributions to the provident fund, pension fund, income protection, UIF and PAYE of employees since February.

National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association have vehemently opposed the decision for the company to administer business rescue procedures and have demanded that they act urgently to pay their staff. 

“We are of the view the that the application for business rescue was filed prematurely and demand that it must be immediately withdrawn,” Numsa charged in a statement.

“Government as the shareholder and executives must continue to implement the turnaround strategy which was distracted by the premature business rescue process.”

DA welcomes liquidation 

Ghaleb Cachalia, the DA’s Shadow Minister for Public Enterprises, welcomed the decision to liquidate the company. 

“The Democratic Alliance (DA) welcomes the decision by the Business Rescue Practitioners (BRP) appointed to SA Express to liquidate the company as ‘there is no reasonable prospect for SA Express to be rescued’.”

“This is long overdue. Despite successive government bailouts amounting to R1.5 billion received by SA Express over the past two years, the airline is insolvent as its current liabilities exceed its current assets by R374 million during its 2019 financial year.”

“It recorded a loss of R591 million in 2019, more than three times the previous year’s R162 million loss.”

Cachalia said that in light of this decision, The Department of Public Enterprises should now consider condemning South African Airways (SAA) to the same fate.

“The Minister responsible for Public Enterprises would do well to apply the same logic to South African Airways (SAA), and other defunct entities, which is equally bankrupt and represents a considerable ongoing drain on the fiscus at a time of national crisis where the funds potentially earmarked for shoring up a failed company could be better employed in the battle against Covid-19.”

“We do not need a flying albatross – what is needed is all hands on deck in the ship’s infirmary.”