SA Express 'terribly distressed', court hears

SA Express Logo (Supplied)
SA Express Logo (Supplied)

The High Court in Johannesburg has reserved judgment in an application brought by a private logistics company for SA Express to be placed in business rescue over unpaid debt.

In an urgent hearing on Monday, Ziegler SA stated that putting the airline in business rescue would be in its best interests, as opposed to going down the route of liquidation.

Advocate Nazeer Cassim told the court that the rescue of the struggling regional airline was the "primary focus" of the application, as they believe that there is hope that it could be rescued.

"Liquidation destroys businesses... we don't want to destroy the business," said Cassim, adding that its services were critical to the tourism industry, given its strategic position in the market.

"This is an entity which is capable of being salvaged."

The application by Ziegler, a transport and logistics company which had previously entered into an agreement with SA Express, is an effort to recover around R11.3m it says the airline owes it for services rendered. However, the airline has disputed the claim, charging that the company was one of the contractors identified as irregular and misaligned to the Public Finance Management Act (PFMA).

It also says that its contract with Ziegler SA was terminated in January 2019, following a review in which it says it found a "number of discrepancies".

"This supplier is one of many who are currently under internal review for serous abuse of the procurement system, unfair pricing and overcharging," the airline said in a statement last week.

Ziegler has denied that aspects of its contract were irregular.

SA Express' financial and operational struggles are well documented. The airline reported a net loss of R590m in the financial year ended in March 2019, with a net current liability position of R374m. The Auditor General gave it a disclaimer of opinion on its annual report and financial statement.

In his submission, Cassim further argued that that the AG report was a "critique on present management" of the airline, as Judge Fiona Dippenaar sought to find out if the airline was "terminally ill or distressed".

Cassim responded: "It's terribly distressed."

SA Express is an alliance partner of SAA, and is dependent on it for code sharing and related services.

The airline's legal representatives argued that the application was not urgent and that the court should decline to entertain it, adding that a portion of Ziegler's debt was in dispute. 

"The applicant wanted to fire the first salvo in order to trigger a payment that is in dispute," said Advocate William Mokhare.

According to Majatladi, there was a clause in the contract which limited SA Express from reviewing or disputing incorrect invoices. 

The airline been grounded twice in the past two years - first in 2018, for not complying with safety regulations of the South African Civil Aviation Authority, and then again in 2019 due to financial challenges as it owed Airports Company South Africa R71m in legacy debt. 

Should the liquidation order be granted, the airline will join the cash-strapped national carrier SAA, which was in December placed in business rescue.

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