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Comair explains why it turned to court on SAA

May 07 2015 16:06
Adam Wakefield

Pretoria - The validity of SA Airways receiving an extension of a government loan was a matter for the courts, not the Competition Commission, the High Court in Pretoria heard on Thursday.

David Unterhalter, for Comair, said: "The case pleaded... must be heard before the courts and cannot be determined by a tribunal such as the competition tribunal.

"There is a necessity that [the matter] is ventilated before a court of law."

He said Comair's reason for approaching the courts did not depend on any issue that fell within the remit of the Competition Commission, meaning they had to turn to the courts for relief.

"Therefore it's simply not available even if we wished to style our challenge as a competition challenge," Unterhalter said, with a bevy of legal minds looking on as he addressed Judge Hans Fabricius.

In October 2012 the government granted SAA a R5bn guarantee for a period of two years. SAA told Parliament in February 2012 it needed between R4bn and R6bn for a recapitalisation programme. One of the conditions for the R5bn guarantee in 2012 was that SAA's board had to develop a turnaround strategy. In October 2014 SAA was again seeking government support, two years after it was granted the R5bn in loan guarantees.

In January 2015 Finance Minister Nhlanhla Nene said SAA will receive another R6.5bn injection from state coffers, even though he had said in the previous October that there would be no more bailouts and that the airline would have to restructure.

Comair CEO Erik Venter said ahead of the case that the airline regarded the bailouts and certain other government payments to SAA as not compliant with the Domestic Aviation Transport Policy or the law.

Unterhalter, as he neared the end of his submission, said that were the court to rule in Comair's favour, they would alter the period for SAA to get it's house in order from eight to 12 months, so that a regime of "financial security" could be created.

"During that period, SAA must get their house in order," he said.

"Additionally, were the court to find for Comair, some form of supervision of how SAA puts its house in order would be necessary.

"The manner in which the minister and SAA have engaged us in the purpose of making proper disclosure... has not been transparent and they have gone to some length to make it as difficult as possible to gain any insight into what arrangements have been made, when they have been made and how they have been made," Unterhalter told the court.

"We have asked for the court to allow for a structural order to have some supervision [on] how this is done."

Such oversight was not about interfering in government decisions, but about legality, since there would not be any "broad interference" but rather to enforce any "consideration of legality" that the court might identify.

The case continues. 

saa  |  comair  |  low cost airlines  |  aviation


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