Velvet Sky liquidation postponed

By SAPA Time of article published Feb 24, 2012

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Low-cost airline Velvet Sky, which allegedly owes BP Southern more than R29 million, was given until March 5 to respond to BP's application to provisionally liquidate the airline on Friday.

In the Pietermaritzburg High Court, BP's counsel Gerrie Roberts SC, said Velvet Sky had breached its undertaking to pay arrears by February 17 and had not kept up to date with current payments for aviation fuel.

“Velvet Sky has often delayed paying what was due to BP,” he said.

He said the low-cost airline had known two days ago that BP would launch a provisional liquidation application on Friday, but had not responded.

Farouk Moosa SC, for Velvet Sky, said negotiations were taking place and denied allegations that the pilots had not been paid.

“Payments to staff are up to date,” Moosa said.

Judge Johann Ploos van Amstel said that while liquidation applications were usually urgent, he did not envisage problems should Velvet Sky be given until March 5 to respond, and adjourned the matter to March 7.

BP's attorney Thulani Mciwa said in court papers that in view of Velvet Sky's obvious credit difficulties it would not be able to obtain aviation fuel from any major fuel companies in South Africa.

He had heard that Velvet Sky was living from-hand-to-mouth by using credit cards to buy small amounts of fuel from other sources.

However, it was not possible to operate its fleet continuously without the proper fuel supply.

Mciwa said the court should ensure that no creditors were unfairly preferred and that Velvet Sky's assets should be preserved as soon as possible.

The airline drew attention earlier this week when it experienced flight delays on Wednesday and all flights were cancelled on Thursday.

Velvet Sky spokesman Gary Webb said there was in a dispute with a service provider, as the airline was in the process of changing service providers, and that this was not concluded in time to operate.

After delays on Friday morning, flights were scheduled to start around 1pm.

The broad-based black economic empowerment company is based in Durban and flies between that city, Johannesburg, and Cape Town. - Sapa

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