Cape Town – The application to challenge the R5bn government guarantee for South African Airways (SAA) in 2012 was not an attempt to shut down or privatise the airline, Comair said on Monday.
Comair CEO Erik Venter said on Monday that the action taken by JSE-listed Comair [JSE:COM] was not a challenge to stop all funding of SAA. Neither was it a proposal to privatise, challenge the shareholding of SAA, or attempt to shut down SAA, he said.
Comair, the operator of kulula and the domestic routes of British Airways, said on Monday it was disappointed that North Gauteng High Court Judge Hans Fabricius dismissed its application.
“Comair’s sole objective was to attain a level playing field in the domestic aviation market to ensure that all airlines face the same risks and the same requirements to operate on sound commercial principles,” said Venter.
“Government bailouts for SAA skewed this commercial reality as it impacted negatively on all current and potential airline operators.
“Our objective with the legal action was to ensure that funding to SAA, that will ultimately come out of taxpayer funds, follows the correct parliamentary procedure for appropriations out of the fiscus, that government would only provide funding to SAA after consultation with all affected stakeholders (as per the Promotion of Administrative Justice Act), and that any funding is in accordance with government’s Domestic Aviation Transport Policy.”
Why Comair’s case was valid
Comair said the dismissal of the application by Judge Fabricius “simply means that the judge did not rule in favour of the specific remedy sought by Comair, to set aside the R5bn guarantee”.
Comair said it “believes the fact that there was no award for costs would indicate that the judge considered Comair’s case to be valid”.
Ruling on the costs on Monday, Fabricius said: “The views raised in these proceedings were genuine, substantive and complex. In my view Comair should not be mulcted in costs because it was unsuccessful. It penned a genuine constitutional claim.”
Comair said it needs to study the full ruling before it can make further comment, as there might be aspects in the 75 page ruling that could have positive implications for Comair.
Comair: Guarantees don’t comply with legislation
In February 2013 Comair took its battle to the High Court, challenging the failure of ministers of finance and public enterprise to comply with official government policy and legislation, which governs the operation of SAA as a state-owned entity and its competitive relationship with the rest of the aviation industry.
Comair’s legal view was that the current and previous government guarantees, which now amount to over R14bn, do not comply with either the Domestic Aviation Transport Policy or the current legislation (the Constitution, the SAA Act, the Promotion of Administrative Justice Act and the Public Finances Management Act).
Commenting on next steps, Venter said Comair will consult with its legal team to consider its options and the way forward.
* SAA has not yet responded to media queries.