Airlink seeks to block SAA rescue plan with urgent court action

accreditation
(Supplied)
(Supplied)

The South Gauteng High Court in Johannesburg will on Wednesday 24 June hear an urgent application by privately-owned regional airline Airlink wanting to interdict a creditors meeting to vote on the business rescue plan proposed for South African Airways.

The creditors meeting was set by the state-owned flag carrier's business rescue practitioners for Thursday 25 June at 11:00.

Both the Department of Public Enterprises as shareholder of SAA, as well as the rescue practitioners intend to oppose the court application.

Airlink argues that the rescue plan prejudices concurrent creditors, including Airlink, to the benefit of the Department of Public Enterprises, "which will then own an unencumbered business, funded by concurrent creditors, but still commercially insolvent".

Concurrent creditors, in legal terms, stand at the very end of the queue when it come to the possibility of receiving anything from an insolvent estate.

Currently, in terms of the proposed rescue plan, concurrent creditors like Airlink will only get 7.5 cents in the rand.

Airlink said in a statement that it will also seek to have the rescue process terminated, the appointment of the practitioners set aside, and apply for SAA be placed in provisional liquidation. If SAA is placed in liquidation it will lose its operating licences.

In the view of Airlink, the rescue plan is not commercially viable, especially given the uncertain outlook for the airline industry after the Covid-19 crisis.

"The plan requires taxpayers to prop up the company for several years post rescue. The plan is still conditional, SAA remains commercially insolvent on the business rescue practitioners’ own version, and there is no indication as to how the plan and the expected losses will be funded," states Airlink.  

In its statement, Airlink says, unlike what the Department of Public Enterprises alleges, it is not a competitor for SAA, but has for the past 23 years been feeding traffic onto the mainline services of the national carrier in terms of a franchise agreement.

Earlier this year Airlink terminated the franchise agreement after SAA went into business rescue and failed to pay over more than R700 million of revenue for tickets issued on flights flown by Airlink.  

In the view of Airlink, the rescue practitioners are not adequately independent. The Companies Act requires business rescue practitioners to act in the interest of all affected parties.

The National Transport Movement (NTM) expressed concern that the Airlink court application might "tilt" the rescue attempt of SAA towards liquidation and is glad that government intends to oppose it.

"This lengthy rescue process which has caused a lot of tax payers monies and pain to workers for it to be derailed," says NTM president Mashudu Raphetha. He cautioned against SA's state-owned enterprises, like SAA, being destroyed.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Rand - Dollar
17.98
-0.8%
Rand - Pound
19.54
-0.6%
Rand - Euro
17.46
-0.5%
Rand - Aus dollar
11.65
-0.2%
Rand - Yen
0.12
-0.4%
Gold
1,651.32
-0.5%
Silver
18.67
-1.2%
Palladium
2,205.00
+2.5%
Platinum
869.00
+0.3%
Brent Crude
89.32
+3.4%
Top 40
57,291
-0.2%
All Share
63,657
-0.2%
Resource 10
60,038
+3.7%
Industrial 25
77,337
-1.5%
Financial 15
13,806
-2.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders