The High Court in Johannesburg has denied Airlink (South Africa) (4Z, Johannesburg O.R. Tambo) the right to sue South African Airways (SAA). The regional airline had been seeking to recover funds from ticket sales under the terms of its franchise agreement with the embattled flag carrier. Still, on March 2 the court dismissed the application saying Airlink must wait in line like all other creditors.

As previously reported, Airlink wanted special permission from the court to order SAA and its business rescue practitioners (BRPs) to pay about ZAR700 million rand (USD45.5 million) in unpaid ticket revenue, arguing that the lost income was putting its business in jeopardy.

Most of this sum was for flown tickets and related revenue collected in November and December 2019, up until SAA went into business rescue on December 6, a process that shields it from the demands of its creditors.

Under the terms of Airlink’s long-running franchise deal with the flag carrier, sales of tickets for its SA8-coded flights were processed by SAA’s reservation system. Revenue from these sales was meant to be “ring-fenced and safeguarded” until it was paid once the tickets had been flown, Airlink said in a statement on March 3.

This arrangement had worked until November when SAA said it was unable to transfer funds derived from tickets redeemed on Airlink flights in the preceding weeks, as it had used the money for its own working capital.

“Although we are disappointed by the judgment, we respect the judicial process and will either seek leave to appeal or recoup our revenue from SAA as a creditor,” Airlink’s chief executive and managing director Rodger Foster said in a statement.

“While today’s judgement is a setback for Airlink, we have a robust balance sheet and have made alternative arrangements to ensure we have sufficient funds available to continue operating and serving our customers without any disruptions. At the same time, as part of our resilience and growth strategy, we have been busy preparing for business beyond and after the SAA franchise,” Foster added.

In January, Airlink notified SAA of its intention to end the franchise on June 10, 2020, after which it would operate on its own 4Z flight designator and ticketing code. The carrier said in its statement that it had been “putting in place cooperative agreements with several international long-haul airlines” to carry connecting passengers and cargo on its network in southern Africa.