June 9, 2020 / 2:15 PM / a month ago

South African airline SA Express escapes liquidation for now

JOHANNESBURG (Reuters) - South African state airline SA Express escaped liquidation on Tuesday after a judge granted a three-month delay in liquidation proceedings, giving the government more time to clarify its plans for the domestic and regional carrier.

FILE PHOTO: An employee of South African airline SA Express holds a placard as they demonstrate against the struggling state-owned carrier, amid the spread of the coronavirus disease (COVID-19) outbreak, outside the Union Buildings in Pretoria, South Africa, June 5, 2020. REUTERS/Siphiwe Sibeko/File Photo

SA Express, a different business to national flag carrier South African Airways (SAA), was placed under provisional liquidation in April after its administrators said they could not secure funding for turnaround efforts.

But in papers filed in the High Court and seen by Reuters, lawyers for the administrators asked to delay a final ruling on whether it should be liquidated, saying there was a possibility the government could fund a restart of the airline’s operations.

They cited a letter from the state enterprises ministry that referred to an allocation of 164 million rand ($10 million) in the financial year that began in April, subject to certain conditions.

The lawyers said that delaying the hearing would allow “national executives to roll out proper plans”. It would also prevent the airline from losing its operator’s certificate and air licence, which could help creditors to recover some money, they added.

The request for a delay was supported by the provisional liquidators, who said they needed more time to study the airline’s affairs, as well as some trade unions and creditors.

The NUMSA and SACCA unions issued a statement saying they were vehemently opposed to the airline’s liquidation.

SA Express suspended operations in March as the COVID-19 pandemic compounded its financial difficulties. It entered bankruptcy protection in February after losing a court battle with a contractor.

It has not paid salaries since February, prompting some employees to protest.

SAA is also fighting for its survival under bankruptcy protection. The pair have been a drain on the public purse at a time of weak economic growth.

Reporting by Alexander Winning; Editing by Emelia Sithole-Matarise and David Goodman

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