Smoke On Go

SA Express licences, route allocations cancelled with immediate effect

South Africa’s International Air Services Council has cancelled all licences and related route rights currently allocated to regional state-owned airline SA Express (SAX) with immediate effect.

By Carin Smith – Fin24

The regional state-owned airline’s liquidators are informed of this step in a letter dated 8 July 2022 and seen by Fin24. The letter indicates that the liquidators were trying to sell the airline’s licenses as intangible assets.

SAX went into business rescue in February 2020. It was placed in provisional liquidation since April 2020 and has not operated since. The provisional liquidators indicated in 2020 that the amount to be raised was R50 million. The sale by the liquidators of the airline’s few tangible assets at the time raised about R30 million. 

Repeated attempts since then to conclude a sale of the airline had failed and in March this year the liquidators announced the re-opening of the bidding process. 

In its letter to the liquidators, the council expresses concern that the airline was not complying with the licensing provisions of the International Air Services Act, and therefore, the council decided to cancel the licenses and related route allocations.

The Commission of Inquiry into State Capture directed police in the North West to urgently conclude an investigation into corruption involving SAX, including claims that former transport minister Dipuo Peters and others received kickbacks from a corrupt ground handling contract. 

The inquiry also found that officials from the North West government flouted a host of procurement rules in 2015 when they awarded SA Express a five-year, R400 million contract to provide flights and ancillary services to Mafikeng and Pilanesberg airports.

In addition, Fin24 reported in February this year that an inquiry by the provisional liquidators of SAX found unreliable debtors’ information – due to corruption allegations – and encountered “uncooperative” directors.

The investigation established that SAX was seemingly trading as a going concern from 2004 to 2010, as it could pay its debts on time and employees received bonuses during this period. The financial distress of SAX started from 2012. The company sought funding at the time due to the costly leasing of aircraft – higher than the airline’s revenue.

SAX has liabilities of more than R900 million.

* Fin24 has reached out to the Council as well as the liquidators for comment. This article will be updated if any is received.

This article was first published by Fin24, read the original here.




Subscribe to our newsletter for new blog posts, tips and news