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Calls emerge to place S. African national carrier under business rescue

Xinhua, August 11, 2016 Adjust font size:

Calls emerged on Thursday to place state-run South African Airways (SAA) under business rescue following a High Court judgment imposing a hefty fine on the national carrier.

The High Court ruled earlier this week that SAA must pay 104.6 million rand (7.8 million U.S. dollars) plus interest to nationwide airlines as a result of SAA's anti-competitive behavior.

Seen as just another nail in the beleaguered airline's financial coffin, the ruling is certain to plunder the SAA into further financial disarray, necessitating the need for the airline to be placed under business rescue, the opposition Democratic Alliance said on Thursday.

The judgment has set a precedent, which should be of concern to the National Treasury and Minister of Finance, Pravin Gordhan, as airline Comair is seeking damages in excess of one billion rand in litigation based on similar circumstances, the party said.

The High Court judgment, in addition to the estimated 11 billion rand of trading losses over the past two and a quarter years, makes it incomprehensible that Gordhan continues to be prevented from placing the bankrupt national airline into business rescue in terms of the Companies Act of 2008, said Alf Lees, DA Deputy Shadow Minister of Finance.

This would be by replacing the delinquent board with competent and dedicated people, he said.

Despite the obvious urgency of the SAA matter, it is unfortunate that neither Yunus Carrim, the chair of the Standing Committee on Finance, nor Gordhan has acknowledged the matter, according to Lees.

"Whilst we understand that there is clearly a direct interference in the affairs of SAA by President Zuma, neither Minister Gordhan nor Chairperson Carrim can escape their responsibilities to urgently deal with the SAA debacle," Lees said.

The DA will consequently follow up on these requests in an effort to ensure that SAA is competitive, privatized, self-reliant and well-governed, he added.

In early 2015, the National Treasury announced additional guarantee of 6.488 billion rand to SAA to bail out the cash-strapped airline.

This brought to 14.4 billion rand the total guarantees granted to SAA.

SAA is one of the state-owned companies singled out by President Jacob Zuma to be regenerated under a turnaround plan. The other two are the electricity utility Eskom and the South African Postal Office. Endit