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Call to place SA Express under business rescue as it is allegedly bleeding R1m a day

SA Express should be placed into business rescue and possibly liquidated, says the DA, following a report that the state-owned airline paid about R150m to lease 21 aircraft in the last five months.

According to Fin24 sister publication City Press, sources claim that of the R150m, about R80m was used to pay for 13 aircraft, which have not flown for five months. They said most of them may never fly again because they are scrap.

The South African Civil Aviation Authority (SACAA) suspended SA Express' Aircraft Maintenance Organisation (AMO) and Air Operators Certificate (AOC) in May, reported Fin24. The SACAA also suspended the Certificates of Airworthiness for nine of the 21 aircraft operated by the airline, citing non-compliance in relation to 17 specific findings. The SACAA reinstated SA Express' AMO certification in June.

City Press calculated that in June and July, SA Express paid about R50m to lease its 21 aircraft, none of which flew a single flight in those two months. The publication reported that SA Express is losing more than R1m a day, paying leases on aircraft that lie idle in hangars because they are too unsafe to fly.

At the end of July, the CAA granted SA Express airworthiness certificates for two aircraft. And by the end of last month, the regulator authorised the airline to fly eight aircraft.

SA Express spokesperson Madikwe Mabotha said the airline had made significant progress since it was grounded in May.

“Returning from three months’ lay-off to full operation was never going to be easy,” he said.

Finance Minister Tito Mboweni announced the government will provide additional funding for SA Express, reported Fin24.

"To support a sustainable reconfiguration of our airline portfolio, in 2018/19 government will provide additional funding for SAA and South African Express Airways," he said in his mini budget speech

Mabotha said the R1.2bn bailout would help the company settle some of its debt and return to financial stability.

However, the DA's finance spokesperson Alf Lees said it "is mind-boggling" that National Treasury wants to saddle taxpayers with more funding for the airline.

"It is unconscionable that SA Express is kept 'alive' with taxpayer bailouts simply to provide 'employment' and salaries to highly paid executives and staff."

Lees said the DA will propose amendments to the Adjustments Appropriation Bill to prevent the payment of the R1.7bn to SA Express.

SA Express should be placed into business rescue, and if this fails, it must be liquidated, he said.

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