File photo: Nicholas Rama (ANA).
File photo: Nicholas Rama (ANA).

Parliament committee meets SA Express Airways over grounded flights

By ANA Reporter Time of article published Aug 30, 2019

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JOHANNESBURG  - Parliament's portfolio committee on public enterprises said on Friday it had met executives at South African Express Airways to probe its financial problems which had led to the nationwide grounding of flights over a legacy debt of around R71 million.

"The committee hopes for a speedy and sustainable agreement between SA Express and Airports Company South Africa (ACSA)," chairman Khaya Mgaxa said in a statement.

ACSA on Thursday confirmed it had suspended the state-owned airline from landing and taking off from its runways due to the non-payment of airport fees over a period of time.

ACSA said confidentiality prevented it from disclosing exactly how much SA Express owed it, but added that its executives had for several months been meeting with the airline to settle the outstanding payment for passenger service charges, landing and parking fees.

On Friday, parliament's public enterprises committee, which is currently on an oversight tour to familiarise itself with the operations and challenges faced by state-owned firms, said SA Express interim CEO Siza Mzimela attributed the grounding of flights to historic challenges including a weak balance sheet, frozen credit lines, liquidity challenges, long outstanding debt and a significant monthly cash bill.

This had resulted in low staff morale, a high number of management vacancies and a lack of accountability. A number of contracts were also found to have been done via third parties, resulting in additional costs to the airline.

The committee heard that the R1.2 billion re-capitalisation money the airline received in February was ring-fenced to settle government-guaranteed debt only and was not nearly enough to cover operations.

This had left it with no working capital after RMB bank pulled an overdraft facility.

"Whilst the airline is able to secure an overdraft facility of R300 million, this is subjected to government guarantees," the committee said.

It quoted deputy minister of public enterprises Phumulo Masualla as saying a turn-around plan for SA Express rested on an injection of resources, but that those received had gone towards paying debt rather than address the cost of current and future operations.

Mgaxa said the airline's request for a government guarantee of R300 million should take cognisance of the fact that the country had serious financial challenges and alternative solutions should be investigated in the event that the guarantee was not approved.

- African News Agency (ANA) 

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