D-Day looms for SA Express unless last-minute 'miracle' saves it, MPs hear

SA Express needs a "miracle" if it is going to ever take to the skies again, according to the Acting Director General of the Department of Public Enterprises, Kgathatso Tlhakudi.

The department and Treasury officials on Wednesday night briefed Parliament's standing committee on appropriations on the financial challenges facing three struggling state-owned enterprises - SA Express, SAA and Eskom.

SA Express was placed under provisional liquidation in late April after a failed business rescue attempt. Affected parties have until June 9 to contest to the provisional liquidation before a final order of liquidation is made. All of the airline's assets will have to be sold to pay outstanding debt if it goes into final liquidation.

"It is safe to say 9 June may just be the D-Day unless some miracle materialises," Tlhakudi said.

While SA Express and SAA are both state-owned airlines, they are distinct businesses. SAA was placed into voluntary business rescue in early December. 

'An absolute travesty'

SA Express was unable to pay staff salaries in May, and has suspended the contracts of its employees in terms of the Insolvency Act. It had also been unable to pay March and April salaries. 

With assistance from the department of public enterprises, it did receive R5.7 million from the Unemployment Insurance Fund Covid-19 TERS scheme to pay employees. "There weren't funds to pay the salaries at all," said Daniel Terblanche, one of SA Express's business rescue practitioners, who was also attending the meeting.  

The business rescue practitioners received no post-commencement funding throughout the process, Terblanche explained. "The lack of funding ultimately caused the non-payment of salaries. It was an absolute travesty."

The state previously had provided R1.2 billion in urgent financial support to the airline for the 2019/20 financial year, including R300 million released in October 2019. 

The airline has incurred losses every year since the 2011 financial year, with the exception of 2016. Before Covid-19 struck it had already been battling with liquidity issues due to its high cost structures and contracts for the procurement of critical services, among other things. It also had its operator certificate suspended twice – in 2016 and 2018.

ZAR/USD
16.62
(+0.36)
ZAR/GBP
20.96
(+0.18)
ZAR/EUR
19.01
(+0.24)
ZAR/AUD
11.65
(+0.20)
ZAR/JPY
0.16
(+0.25)
Gold
1811.10
(+0.16)
Silver
19.36
(+0.43)
Platinum
834.00
(+0.66)
Brent Crude
43.06
(+0.42)
Palladium
1963.36
(+0.78)
All Share
56115.97
(+1.05)
Top 40
51778.92
(+1.06)
Financial 15
10637.16
(+1.04)
Industrial 25
76283.05
(+1.02)
Resource 10
53832.05
(+1.15)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 2080 votes
I am taking a hit, but should be able to recover in the next year
23% - 2680 votes
My finances have been devastated
35% - 4049 votes
It's still too early to know what the full effect will be
25% - 2907 votes
Vote