Business rescuers for SA Express are moving to liquidate, due in part to the novel coronavirus
- Business rescue practitioners at SA Express believe the airline cannot be saved, and are moving to liquidate it.
- They said salaries will also likely not be paid on time – or not at all – due to a lack of funding.
- The only thing that will stop them heading to court to put the airline out of its misery is funding from the state.
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SA Express’s business rescue practitioners are moving to liquidate the state-owned airline after they failed to secure state or other funding to keep it afloat.
Salaries are likely not be paid on time – or not at all – due to the lack of funding, the practitioners said.
SA Express, which suspended all its flights on Wednesday, was placed in involuntary business rescue in February.
In a letter to all employees, seen by Business Insider South Africa, business rescue practitioners Phahlani Mkhombo and Daniel Terblanche said that, without additional funding from the state, business rescue at the airline will not succeed.
Challenges at the airline have been exacerbated by the recent spread of the novel coronavirus, the practitioners said.
The SARS-CoV-2 virus behind Covid-19 has seen a massive reduction in air travel.
“We have [therefore] come to the conclusion that, a reasonable prospect to rescue the Company no longer exists, and consequently, we will begin a process to convert the current business rescue proceedings of the Company into liquidation... with immediate effect,” the letter to employees read.
Also read: ‘We just take parts from grounded planes’ SA Express source says – but the airline maintains safety is not a concern
Aside from an inability to pay salaries, the business rescue practitioners said the airline has also not been able to make contributions to the provident fund, pension fund, income protection, UIF and PAYE of employees since February.
Various discussions with the department of public enterprises had, apparently, not led to securing the necessary funding.
If the state is able to secure funding before the liquidation application is heard in court, the application will be withdrawn, the practitioners said.
The department of public enterprises has long been accused of frustrating the business rescue processes at the airline, and instead opted to develop their own business rescue plan, Daily Maverick reported.
In the letter to staff, the business rescue practitioners said SA Express planes were grounded on Wednesday as a result of the company’s failure to pay outstanding insurance premiums for which it was granted a number of extensions.
The majority of the airline’s aircraft lease agreement have also been suspended or terminated due to non-payment.
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