South African Airways (SAA) is in the hot seat again following the High Court judgement last week ordering the airline to pay R104.6 million plus interest to Nationwide Airlines because of its anticompetitive behaviour.
This fine comes after SAA has been in the spotlight of late due to financial difficulty.
“This is certain to plunder SAA into further financial disarray, necessitating the need for the airline to be placed under Business Rescue,” stated the Democratic Alliance (DA).
The concern stems from the fact that with the extensions and leeway provided to the SAA so far, the government has set a precedent. “This should be of concern to the National Treasury and the Minister of Finance, Pravin Gordhan, as Comair is seeking damages in excess of R 1 billion in litigation based on similar circumstances,” added the DA.
With this latest financial blow, SAA seems to be on its last legs.
“The remaining R99 million that it can borrow against the R15 billion government guarantee is not enough to meet the Nationwide judgement that is likely to amount to R140 million once interest charges are added. The R140 million added to the leaked first quarter loss of R 1.3 billion means that SAA will in all likelihood start defaulting on creditor payments,” the DA explained.
Should SAA be unable to pay the R140 million compounded by the court order, the National liquidators will be forced to file for liquidation.
“Whilst it has been well known for more than a year, now even those who have denied it can no longer escape the fact that SAA, under its Myeni board and under the protection of President Zuma, is bankrupt and has been and continues to trade recklessly. The Directors, including President Zuma’s very close friend, Dudu Myeni, are undoubtedly in breach of Section 77(3) of the Companies Act of 2008 and must be held personally liable for the losses incurred by SAA that we estimate now amount to some R11 billion for the 2014/15 and 2015/16 financial years as well as for the first quarter of 2016/17,” the DA stated.
They added that the way forward would be to place the airline into business rescue in terms of section 131(1) of the Companies Act of 2008, and replacing the current board. If this is not done the brunt could fall on the already thinly stretched taxpayers.
