Troubled Velvet Sky lays off staff

By Drum Digital
16 March 2012

Troubled low-cost airline, Velvet Sky, has started to lay off staff as it battles with cash flow problems, SABC reported on Friday.

When contacted by Sapa, the company's chief executive officer Gary Webb refused to comment on the matter, saying it was "private".

The broadcaster reported that the airline's staff have been given notice of temporary lay-off rather than being retrenched.

The process apparently commenced on Wednesday and was expected to continue until June 30.

Staff will not be paid their salaries during the lay-off period, the broadcaster reported.

The lay-offs come as the airline is facing a liquidation application in the Pietermaritzburg High Court, which it is challenging.

The action was initiated by fuel supplier BP Southern Africa after alleging that Velvet Sky owes it R29 million.

This has also forced BPSA to suspend fuel supply to the airline in January this year, in order to mitigate against any further financial risk exposure.

Last month the airline also announced that its flights were going to be suspended between February 27 and March 5 "as a result of recent events, the negative impact on business" and "the adverse publicity".

"The suspension will allow the company time to reconstitute its board and balance sheet, and realign its short-term strategy. It will also allow the company time to properly resolve disputes with certain suppliers," Excalibur Aerospace, the majority owner of Velvet Sky airline, said in a statement.

However, flights had not resumed by Friday.

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