SA Express again turns to UIF for money to pay salaries

SA Express will not be able to pay salaries for April unless it obtains financial support from the Covid-19 Unemployment ‌Insurance Fund or the Temporary Employer/Employee Relief Scheme overseen by the Commission for Conciliation, Mediation and Arbitration*, according to the state-owned regional airline's business rescue practitioners.

There has been no outcome, as yet, to a similar application for money to pay the March salaries.

A letter addressed to stakeholders indicates that the BRPs have applied for funding from the UIF in order to be able to pay the April salaries.

"This is so frustrating and depressing. We feel there is a lack of formal communication with us. First it was the March salary and not April's. How must we live?" an airline employee said on condition of anonymity.

SA Express was forced into business rescue by the South Gauteng High Court in accordance with the Companies Act on 6 February 2020. Transport and logistics company Ziegler SA applied to have the airline placed under business rescue in January, saying it is owed R11 million. SA Express disputes the procurement processes involved with the company.

SA Express was placed under business rescue due to financial pressures that resulted from years of poor management and state capture, the Department of Public Enterprises (DPE) previously said.

According to the BRPs, SA Express is facing "a myriad of financial and operational challenges". These include "the adverse operational challenges that the company faced in the last months, exacerbated by the impact of the Covid-19 pandemic on the domestic and global airline industry".

The BRPs say these have affected the airline's ability to generate any revenue to fund critical operational expenses as they became due. The challenge to generate cash was further increased by the suspension of operations on 19 March 2020. "Non-critical" staff were placed on compulsory leave.

The BRPs even brought a court application against the DPE towards the end of March to have the airline provisionally liquidated, claiming that the department had not yet agreed to pay R350 million required to save the airline.

The department later said it would determine its course of action after studying the liquidation application.

In a statement, the department said that allegations by the BRPs that the government deliberately withheld financial support from them, and that the state's approach to the business rescue process was unconstructive, were baseless.

The DPE said a long-term business rescue plan needed to take into consideration the commercial viability of the airline "in a competitive and volatile South African aviation sector".

The state has provided more than R1.2 billion in urgent financial support to SAX for the 2019/20 financial year, including R300 million released last October. Before SA Express was placed in business rescue, government mandated the board and management to investigate and terminate a number of irregular contracts as a way to save money and root out corruption.

* The TERS scheme overseen by the CCMA is intended to help companies in distress avoid retrenchments. Introduced in 2019, it is distinct from the coronavirus relief scheme. 

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