Provisional liquidators of SA Express are bent on requesting more powers from the government, which will allow them to sell assets for cash. The liquidators plan to use the money to repay the airline’s creditors an amount totaling more than $142m.
According to Business Maverick, Aviwe Ndyamara and his team plan to request a court application to extend their capabilities.
Liquidators request to do more
Newly appointed by the High Court in Johannesburg on April 29th, the team of provisional liquidators’ primary role is to “safeguard the assets” of SA Express and “engage affected parties of the airline, which include 691 workers and creditors”.
An extension of powers will allow liquidators to eradicate aircraft leases and seek out potential buyers for the regional carrier before it reaches insolvency. Additionally, the team wants to sell the airline’s assets to pay back creditors $142m.
However, it is not as simple as it sounds. As the South African government remains the only shareholder of the airline, it is safe to say that even by extending their abilities, liquidators will continue to face barriers. Any major decision will thus require approval from the state.
The airline’s final liquidation will take place on June 9th. However, lead liquidator, Ndyamara believes that it is still too early to decide on SA Express’s fate.
“We are far from having an end game. We are in the early stages, and we have to familiarize ourselves with what is SA Express and assets the airline has, who are the creditors, and the quantum of creditor claims,” Ndyamara says, in Business Maverick.
He aims to seek an extension of the court date. Ndyamara explains that they are far from understanding whether the airline should be reinvested by the state, sold to a buyer, or have its assets sold before dissolving.
“We need to understand whether there would be investment [in the airline], a restart of operations, or sale of the airline. It is not practical for the process to be completed by June 9th,” Nydamara added.
Operations suspended since March
The South African airline had suspended operations since March 18th indefinitely, amid coronavirus travel bans. The carrier’s significant financial issues also prove to be a factor for the ceasing of operations.
The situation has undeniably left their employees in a state of limbo. As reported by the Business Maverick, the appointed liquidators sent out a letter to all 691 workers of SA Express on May 15th, stating their “contracts have been suspended.”
To date, the workers have not been paid a salary in three months.
The end for SA Express and SAA?
Things aren’t looking up for either SA Express or its mainline affiliate, South African Airways. SAA entered business rescue in December 2019, with SA Express joining shortly after, in February this year.
Although SAA is still receiving government bailouts despite previous reports that the state will no longer provide funds, the airline continues to struggle. On May 21st, the government threw another lifeline at SAA – supplying it ‘provisional’ funding amounting to $212m. Rescue practitioners for the flag-carrier have until mid-June to come up with a final plan to save the carrier.
With frozen credit lines and debt issues arising since last year, SA Express is no stranger to obtaining government funding.
However, it seems like it will take a lot more than funding to save these South African airlines now. Instead, talks are underway for a new airline to possibly take over.
Simple Flying has reached out to SA Express for comment but did not hear back before publication.
What do you think will be SA Express’s fate? Will South Africa’s airlines prevail? Let us know in the comments.