State-owned airline SA Express must be placed into business rescue, the Johannesburg High Court ruled on Thursday morning.
While SA Express and SAA are both state-owned airlines, they are distinct businesses. SAA was placed into voluntary business rescue in early December.
Earlier in January, transport and logistics company Ziegler filed an urgent court application to place SA Express under business rescue, in an effort to recover around R11.3m it says the airline owes it for services rendered.
But shortly after the ruling was handed down on Thursday, SA Express said it had instructed its attorneys to appeal.
"Considering the content of the judgment, it is clear that the court went over and above what it was required and granted orders not sought by the applicant," the group said in a statement.
"The court has also not made any order on whether the matter was urgent or not, in circumstances when the urgency was specifically opposed. The company has instructed its attorneys to apply for leave to appeal, which leave will be filed as soon as it is considered and settled by senior counsel."
Connie Mulder, the head of Solidarity's Research Institute, told Fin24 that the ruling was important, as it showed that state-owned entities were subject to the Companies Act. By making the ruling, the court had "cemented its jurisdiction," he said.
SA Express flies on "secondary" local and regional routes, including to Bloemfontein, East London, Gaborone in Botswana, Hoedspruit, Kimberley. Lubumbashi in the DRC, Mthatha, Port Elizabeth and Walvis Bay in Namibia.
At last year's Budget, Finance Minister Tito Mboweni said government should consider selling SA Express "as a case study" for privatisation.
But the airline received another R300m to keep on flying in September last year - on top of the R1.2bn it got in the February budget.
Last year, SA Express planes were grounded due to outstanding payments to the Airports Company South Africa (Acsa).
It is currently in a battle with SAA for money it says it is owed by SAA. SAA acts as its booking agent, but according to SA Express has not been transferring money from bookings to SA Express.
UPDATE: In a statement issues later on Thursday afternoon, the board of SA Express said it is seeking further legal advice in relation to the business rescue judgment.
"It is a known fact that SA Express has been plagued by suppliers who are currently under internal review for serious abuse of the procurement system, unfair pricing and overcharging," states the SA Express board.
"Tens of invoices, allowed by previous SA Express management, were found to have discrepancies and it is on this, among a number of other issues, that the airline will appeal."