SA Express remains grounded due to ‘operational difficulties’
Parliament’s portfolio committee on public enterprise met with South African Express on Friday (30 August) to probe the current crises relating to the nationwide grounding of flights.
In a statement on Thursday, the airline said that all of its flights had been cancelled as it is dealing with ‘operational challenges’.
Interim CEO Siza Mzimela told the committee that the grounding of flights can be attributed to the various historic challenges facing the airline.
The committee heard that these include a weak balance sheet, frozen credit lines, liquidity challenges, long outstanding debt and a significant monthly cash bill.
This resulted in low staff morale, a high number of management vacancies and a lack of accountability.
A number of contracts were also found in the system done via third parties, which resulted in additional costs to the airline.
Debt
The committee heard that the R1.2 billion re-capitalisation received in February 2019 was ring-fenced to settle government-guaranteed debt only and was not nearly enough to cover the operations of the Governance, Profitability, Operational Efficiency, Customer Value Proposition and Human Capital (G-POCH) strategy adopted by the new board.
The airline was thus left with no working capital, since RMB bank, subsequent to settling the debt using the recapitalisation funds, pulled the overdraft facility.
Acasa’s action of grounding the flights is thus attributed to South African Express’ inability to pay the legacy debt of around R71 million.
In addition, whilst the airline is able to secure an overdraft facility of R300 million, this is subjected to government guarantees the committee heard.
SA Express aid that the situation is receiving urgent attention, as its board is currently engaging with ACSA management, as well as the Department of Transport.
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