South African Express (XZ, Johannesburg O.R. Tambo) has pleaded with its sole shareholder, the South African government, for a direct injection of capital to help stabilize its operations.

During a parliamentary hearing into public enterprises on Wednesday, May 16, acting Chief Financial Officer (CFO) Mpho Selepe said the carrier was now relying on government for funding given banks' unwillingness to extend it support in the absence of a credible turnaround strategy.

Like sister carrier and fellow state-owned enterprise, South African Airways (SA, Johannesburg O.R. Tambo), South African Express has been wracked with allegations of mismanagement resulting in its current poor state of affairs.

According to Selepe, around half of SA Express's fleet of nine CRJ-200s, two CRJ-700s, and ten Dash 8-400s are currently grounded owing to a lack of spare parts. Aside from operational disruptions and the ensuing cost in putting up stranded passengers, the unreliability of the fleet has forced SA Express to wet-lease in additional capacity at great expense. In addition, despite their inactivity, SA Express is still obligated to pay monthly leasing dues on the aircraft.

Edwin Besa, the General Manager in the CEO's office, added that it was very urgent that the airline be recapitalized as this would enable it to pay off its existing loans and thus finalize its accounts as a going-concern.

In addition, a capital injection would also allow the airline to procure spares to return grounded aircraft to the air thus improving service quality while reducing wet-lease exposure.

An improvement in the operating environment would also lead to the airline attracting qualified personnel given a recent brain-drain.

"Most of the critical positions are not filled. As employees leave we are unable to fill the positions because of the salaries we are offering. We are not able to retain the staff we have. Most of the staff are leaving," Besa was quoted by Business Live.

"In terms of leadership there is a lack of accountability that we need to focus on to make sure that people take responsibility for their actions. To address this we need to fill critical positions at least to make sure that the airline is able to function optimally. We need to carry out succession planning and also establish consequence management."

During his speech to parliament on Tuesday, May 15, South African Minister for Public Enterprises, Pravin Gordhan, highlighted the role SA Express plays in servicing thin domestic and regional routes. However, he acknowledged the airline's effectiveness had been impacted by what he termed "extended mismanagement".

As such, SA Express "is likely to require a recapitalisation from government to strengthen its balance sheet, return it to solvency and improve its creditworthiness," he said.

According to the minister, in the longer term, government will explore options for modernising the fleet and the possibility of introducing a strategic equity partner with the context of a singular holding company for SA Express, SAA, and Mango Airlines. This, he said, will both reduce the burden the airlines currently place on the fiscus while at the same time instill a commercial mind-set into their operations.