Just in: State-owned airline SA Express slips into business rescue_1

The Johannesburg High Court has ordered that SA Express, the second-most popular state-owned airline, to be placed under business rescue. It comes just a matter of weeks after South African Airways (SAA) were forced into the same measures.

Why SA Express are under business rescue

The small-scale domestic airline has been suffering from turbulence over the past few years. It can’t pay its bills, and recently, they had their operating license revoked over safety fears. There are also numerous allegations that the operation was used for the purposes of looting by government officials.

SA Express limped into 2020, but it doesn’t look like it will be going anywhere fast. The process of business rescue usually sees a complete overhaul of operations, and it will take time to make the airline into something that resembles a competent outfit. But for yet another SOE to find itself in this position is a damning commentary for the respective structures of management and governance.

Another SOE AIRLINE placed under business. Judge Diepnaar has ordered for #SAExpress to be placed under BR. Business Rescue Practioners include Daniel Terblanche and Phalani Mkhombo appointed as joint interim business rescue practitioners. This after Ziegler put in application— Heidi Giokos (@HeidiGiokos) February 6, 2020

What is business rescue?

Busi­ness res­cue is a pro­ce­dure that facil­i­tates the reha­bil­i­ta­tion of a finan­cially dis­tressed com­pany. The com­pany is placed under the tem­po­rary super­vi­sion of a busi­ness res­cue prac­ti­tioner who man­ages the com­pany. A busi­ness res­cue plan is devel­oped to res­cue the com­pany by restruc­tur­ing its affairs. This may include a restruc­turing of the busi­ness, its prop­erty, debt or other affairs.

Being placed under business rescue means the airline would be saved from being liquidated by its creditors. According to the Public Enterprises Department’s statement, it will allow SA Express – and SAA, who also scored a R3.5 billion bailout in January – to continue operating for the time being.