South African Express (EXY, Johannesburg O.R. Tambo) is set to be liquidated after the bankrupt carrier's business rescue practitioners (BRP) failed to secure the ZAR200 million rand (USD12.77 million) worth of post-commencement funding (PCF) allocated to it in South Africa's 2020/21 Budget. The state-owned airline was placed into business rescue in February in the hopes of salvaging its operations.
However, the turnaround of the carrier, which has generated cumulative losses of ZAR1.2 billion (USD76.7 million) since 2010, has been hampered by government's unwillingness to disburse the allotted funds. While the Department of Public Enterprises (DPE) has attempted to portray the delay as the fault of the BRPs and their inability to devise an acceptable restructuring plan, media reports have pointed to the DPE undermining the BRPs by attempting to have them replaced with others deemed to be more inclined to saving the airline.
Internal company correspondence dated March 21 and seen by BusinessDay indicates BRPs Phahlani Mkhombo and Daniel Terblanche informed employees that without the disbursement from Treasury, they had been unable to stabilise SA Express's balance sheet, a prerequisite for its restructuring. As such, the carrier had "just over ZAR1 million rand (USD56,300)" its bank account last week, insufficient to pay salaries, insurance, make contributions to the provident fund, pension fund, income protection, UIF and PAYE of employees since February.
“We have [therefore] come to the conclusion that a reasonable prospect to rescue the Company no longer exists, and consequently, we will begin a process to convert the current business rescue proceedings of the Company into liquidation... with immediate effect,” the letter to employees read.
The BRPS added that, if the state is able to secure funding before the liquidation application is heard in court, the application will be withdrawn.
