Union ‘disappointed’ with SA Express liquidation as DPE blames corruption, Covid-19

The Department of Public Enterprises (DPE) has placed blame on state capture and corruption, among other things, after SA Express was grounded for good.

The state-owned entity (SOE) has had its wings clipped following a final liquidation order granted by the Johannesburg High Court on Wednesday.

SA Express was placed under provisional liquidation in April 2020, after the regional airline faced grave financial trouble, which at some point saw it unable to pay employee salaries.

With several investors initially interested in purchasing SA Express, the provisional liquidators indicated that more than R50 million was needed to purchase the airline.

However, these attempts to find a suitable buyer for the airline proved unsuccessful.

‘Years of bad management’

In a statement, the DPE said it sympathised with SA Express employees “who were not able to receive any compensation” after years of working at the airline.

“There were three different attempts by provisional liquidators to attract credible buyers including a crowd funding initiative by employees to buy the airline, but none had the requisite financial resources to sustain the business post the sale.

“It is against this background that the department empathise with all the employees of SA Express who started the regional airline and built it into a national brand, but who will walk away without any incentives,” the statement reads.

SA Express has liabilities of more than R900 million – including outstanding salary payments to employees. 

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The department said the airline’s liquidation was a result of many factors – including “years of bad management, state capture, corruption and exacerbated by the impact of the Covid 19 pandemic on the global aviation market”.

The report of the Judicial Commission of Inquiry into State Capture on SA Express detailed evidence of deep-rooted corruption and fraud at the airline.

“By 2019, a criminal investigation was underway and High Court litigation had been instituted. However, by the time the commission heard evidence emanating from this investigation, in June 2019, the criminal process had not gained any substantial momentum.

“The department urges the law enforcement agencies to speed up the investigations into the allegations of corruption and fraud and bring those responsible for the damage caused to our SOE to book,” the DPE concluded.

‘War chest capital’

The Dynamic People’s Union of South Africa (Dypusa) said it was “disappointed” that government did not intervene to save the airline.

“We believe that the government should have done better. We’re disappointed that the government didn’t intervene to date and now the final court,”  the union’s general secretary Mashudu Raphetha told eNCA.

“Government had the capacity to intervene in the sense that they were supposed to oppose [the liquidation] because they have money.

Somebody with a war chest capital was supposed to come on board. As a union, we are a newly formed trade union, we do not have the financial resource to save this,” Raphetha further said.

The liquidation of SA Express follows closely on the closure of local airline Comair, which operated the local British Airways and low-cost carrier Kulula.com, in June.

Comair’s exit earlier this year left a significant gap in the market, reducing airline capacity by about 40%.

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