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Nationwide: Rivals step in
29/04/2008 23:05 - (SA)
Johannesburg - South Africa's low cost airline industry scrambled to take advantage of the collapse of Nationwide on Tuesday, putting on extra flights in the hope of luring the embattled airline's stranded passengers.
"Passengers have the option of utilising South African Express's services. However, South African Express will not accept or redeem any Nationwide tickets," the airline said in a statement.
"Mango will endeavour to assist stranded domestic passengers wherever possible with preferential fares at our guest services counters in Johannesburg, Durban and Cape Town," said its chief executive officer Nico Bezuidenhout.
Other airlines were expected to make similar arrangements.
Cash-flow
After months of speculation about its fate, Nationwide announced on Tuesday that it was no longer operating.
"Our cash-flow has become critical and as a result [we] have decided to voluntarily cease all flight operations until further notice," said chief executive Vernon Bricknell.
"We apologise to our loyal customers for any and all inconveniences experienced."
Nationwide operated international flights to London and Zambia, and domestic flights to and from Cape Town, Durban, Port Elizabeth, George, Mpumalanga and Johannesburg.
The news of Nationwide's closure came as an "unwelcome surprise", said Mango's Bezuidenhout.
Next step unclear
However, the trade union Solidarity said it had not yet been formally told about the move by Nationwide management. All it had heard were rumours circulating among the staff.
"It is unclear to us what is the next step," said Solidarity spokesperson Jaco Kleynhans, adding that the union's concern was to save its members' jobs.
The talk over the past few months had been of selling a share of the company and "we've been positive about that". It would have enabled the company to keep operating.
The company could not "just close". "If you just cease operations the company will go bankrupt," he said.
"If you just shut it's not going to be long before you're bankrupt. If you close, you still have costs... and very quickly you'll have no money left."
SAA have 'unfair advantage'
Another trade union, the United Association of South Africa (UASA), expressed "utter shock" at the development and voiced concern at its members finding new jobs in an environment of high unemployment.
It admired Bricknell's courage in launching the airline and felt the local industry sorely needed competition against South African Airways (SAA).
SAA continued to have "the unfair advantage of being bailed out by the government "despite its legacy of not being able to be profitable for numerous reasons", charged UASA strategic development divisional manager Andre Venter.
"If Nationwide is not going to receive a lifeline, it will mean that our members and many other employees at the airline are going to sit without jobs."
Even though employees would become preferential creditors, they would still be at a disadvantage as they had to go out and look for jobs.
"We are interacting with the airline in respect of the future prospects of our members," he said.
Engine incident started Nationwide's woes
Nationwide's troubles began on November 7 last year when an engine fell off its Boeing 737-200 on take-off for Johannesburg from Cape Town International Airport. The aircraft landed safely half-an-hour later.
On November 30, the South African Civil Aviation Authority (CAA) grounded Nationwide when it suspended its approval of the airline's aircraft maintenance organisation and the certificates of airworthiness of Nationwide's fleet of aircraft.
In his statement on Tuesday, Bricknell said Nationwide had resumed operations in December and January and "attained a gradual recovery of the business.
"However, in the months of March and April we faced a 30% increase in fuel costs coupled with a decrease in passenger load factors."
On February 27, the company announced that it had secured a Black Economic Empowerment deal with the African General Equity Group (AGE) under which AGE agreed to acquire a 51% stake in the airline's group of companies.
However, on Tuesday Bricknell said that work towards "securing investment by a black empowerment consortium" had not come to fruition.
The telephone at Nationwide's head office went unanswered on Tuesday, with a message advising that its reservations and administrations offices were closed.
The message reminded callers of the airline's operating hours and referred them to its website to make and pay for reservations.
There was no announcement of its closure on the website.
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