Solenta Aviation (SET, Johannesburg O.R. Tambo) has taken South African Express (EXY, Johannesburg O.R. Tambo) to court over ZAR87.3 million rand (USD6.5 million) in unpaid leasing debts. Citing papers filed with the Gauteng High Court, Business Day reports the claim relates to fees due on three E145s South African Express wet-leased from Solenta between October 2016 and June this year.
Court documents indicate the original ACMI lease contract was for three aircraft covering the period June to December 2016. The agreement was then extended by mutual consent to January of this year and then again from February 1 to July 31.
SA Express was to pay Solenta USD300,000 per month for 150 guaranteed block hours for the initial contract which was then reduced to USD270,000 under the revised agreement. For any hours over and above the alloted 150, SA Express was to pay Solenta a rate of USD1,200 per hour under the original contract growing to USD1,300 under the revised agreement. Payment was to be made on a monthly basis or within thirty days.
However, SA Express's troubles then began on March 1 this year when Solenta demanded payment for services rendered dating back to September 2016. It warned that unless the debt was settled, the trio of jets would be grounded. Despite the demand for payment, Solenta highlighted the leasing contract would, however, remain intact.
On April 5, SA Express reportedly wrote to Solenta stating that by grounding the aircraft, Solenta had effectively terminated the lease agreement as of March 4, a claim Solenta rejected.
In mid-May, SA Express proposed a payment plan to Solenta in which it would clear its debts through the payment of nine equal monthly installments to run from May 2017 to January 2018.
Solenta Aviation later rejected this proposal while noting that the payment plan was an acknowledgment of indebtedness and an act of insolvency under the Insolvency Act.
Solenta Aviation Director (Flight Operations), Stephen Jolly, subsequently filed an application for liquidation against SA Express claiming it to be unable “to discharge its indebtedness”.
SA Express acting CEO Victor Xaba has since confirmed to Business Day that it will oppose the application, due to be heard on August 11. SA Express is reportedly trying to find an amicable solution to the situation while reassuring creditors it is solvent and able to pay its debts.
In March, Public Enterprises Minister Lynne Brown confirmed SA Express had to seek government assistance when it found it would not be able to meet a February 24 deadline for the repayment of ZAR150 million (USD11.3 million) to Rand Merchant Bank (RMB) and Nedbank. With the assistance of the Department of Public Enterprises, the airline was able to negotiate a payment plan with the banks involving a one-off payment of ZAR58 million (USD4.38 million) with the remainder to be paid off in monthly installments.
