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Comair wants R5bn guarantee to SAA be set aside

May 08 2015 19:48
Jeanne-Marié Versluis

Pretoria - A private enterprise like Comair would have been able to bring a court case against the government's loan guarantee to the South African Airways (SAA) only if it had complained about it to Parliament and the complaint was unsuccessful.

This is what Adv. Matthew Chaskalson SC argued on behalf of Nedbank in Pretoria on Friday in the expensive court case being heard by Judge Hans Fabricius.  

Comair, a competitor in the airline industry, is asking the court to set aside the government's R5bn guarantee to SAA and the consequent extension thereof.

Going concern

According to Comair this guarantee creates more inequality among competitors in the airline industry. The guarantee, furthermore, puts SAA, which is "technically insolvent", only deeper in debt.

Comair said the National Treasury announced on 2 October 2012 that the government had given the guarantee to SAA for two years to enable the airline to lend money from banks and remain a going concern. The guarantee was later extended.

Nedbank, Standard Bank and Citibank are opposing Comair's application.

Nedbank lent SAA R1.8bn, Citibank and Standard Bank lent R1.5bn each and Absa lent R1.7bn.  

Chaskalson said banks often lent money to parastatals against the provision of guarantees. He wanted to know where it would end if another private competitor were to take on a public enterprise in court, because it had obtained a government guarantee for a loan. The problem would become worse if environmental organisations came to court if a public enterprise like Eskom, for example, obtained a loan guarantee for a project.

Approach the court

Chaskalson also said if an organisation did not first complain to Parliament, it could not go to court.

In answer to this Fabricius said it would be "very unwise" if he simply found that Comair could not approach the court and then the Constitutional Court finds the opposite and sends the case back.

The case continues on 14 May.

* For full story and more news in Afrikaans visit Netwerk24.

saa  |  comair  |  pretoria  |  low cost airlines  |  aviation industry
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