Velvet Sky fights to stay aloft

2012-02-25 00:00

THE allegedly bankrupt low-cost passenger airline, Velvet Sky Aviation, was granted a brief reprieve by Pietermaritzburg high court Judge Johann Ploos van Amstel yesterday.

The judge refused to grant an urgent application by BP Southern Africa to place the airline under provisional liquidation and instead ruled that Velvet Sky Aviation should be given a chance to file replying papers in the case.

However, he said he was putting the airline on terms to file its response by March 5, and adjourned the case until March 7 for further argument.

Gerhard Roberts, SC, for BP, earlier submitted that an adjournment in the case was merely “postponing the inevitable” because Velvet Sky Aviation clearly cannot pay its debts, allegedly totalling more than R29 million in respect of BP Southern Africa alone.

According to court papers, the airline had signed an acknowledgement of debt for R20 million on February 7 (in favour of BP Southern Africa), and subequently is alleged to have breached the terms of an agreement to repay its debts in stipulated instalments.

But in reply advocate Farouk Moosa, SC, said the airline was only served with the court papers two days ago and attempts had been made until 9 pm on Thursday to try and reach a settlement in the matter.

“Negotiations fell apart,” he said.

He said the airline, however, wants an opportunity to file responding affidavits, and said a number of the points raised in the court papers will be disputed.

For example, there is a submission by BP Southern Africa that the airline is “misleading the public” by offering vouchers on its website to the effect that if customers pay R400 before April 7, they will get vouchers for R600 off their next purchase from Velvet Sky. Moosa said the company will maintain it is merely “competing for business”.

He also said reports that pilots have not been paid are not correct, and said the airline is “buying fuel for cash” from other suppliers ensuring that its aircraft are in fact flying.

Velvet Sky Aviation offers low cost flights between Johannesburg, Cape Town and Durban, operating from offices at Umhlanga Ridge.

According to court papers, it began trading on March 22, 2011.

BP Southern Africa’s legal advisor, Thulani Mciwa, said in an affidavit that the company has supplied Velvet Sky with aviation fuel since March 2011 and in the latter half of that year the company began falling into arrears with payments.

As at February 13 this year the company was indebted to BP to the sum of R29 433 957, he said.

He alleged that from December 30 onwards Velvet Sky had deposited numerous cheques into BP’s account which were dishonoured.

In all, during a three-week period a total of 29 cheques totalling R33,9 million made out to BP Southern Africa by the company “bounced”.

He said Velvet Sky acknowledged in writing on February 7 that it owed BP at least R20 million, but has breached an undertaking to pay instalments due on specified dates.

He claims to have established that Velvet Sky is living “from hand to mouth” by using credit cards to buy small quantities of fuel from other suppliers for its aircraft. While this might keep them going “for a few days”, it was not possible to operate a fleet of aircraft on a continuous basis without a proper supply of aviation fuel he said.

He submitted that in view of the company’s obvious credit difficulties it will not be able to buy fuel from any other major company in SA.

Roberts submitted on behalf of BP that it was imperative for a liquidator to be appointed urgently to take charge of the struggling airline in the interests of all creditors.


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