Tuesday, February 26, 2013

■ SOUTH AFRICA: Comair Ltd takes SAA's current and previous bailouts to the High Court; disputes their legality.

Comair LtdSouth Africa's Comair Ltd, the British Airways (BA) franchise owner for South Africa and owner of LCC kulula (MN), is to dispute the legality of South African national carrier, South African Airways (SA)'s ZAR5billion bail out from Government last year and its previous injections amounting to ZAR11billion, in the High Court in Pretoria tomorrow.

Comair's presentation today
Comair's presentation today (Marise Lerm)
In a presentation to the media today, Comair boss Erik Venter outlined his group's case - to be presented to the North Gauteng High Court tomorrow by Barrister David Unterhalter - that will focus on current and previous bailouts received by SAA, which now amount to over ZAR11billion spread over eight plans. Comair claims that the bail outs "do not comply with either the South African Domestic Aviation Transport Policy or the law (the Constitution, the SAA Act, the Promotion of Administrative Justice Act and the Public Finances Management Act)."

A press release went on to add that the court case was not about seeking to change SAA's structure or to prevent further bailouts, but to change the way in which bailouts are effected by forcing government, SAA's sole shareholder, to consult all stake holders prior to any future injections of funds.
Venter says, “Comair’s sole objective is to attain a level playing field in the domestic aviation market to ensure that all airlines face the same risks and the same requirements to operate on sound commercial principles. By receiving government bailouts, SAA avoids this commercial reality and this negatively impacts on all current and potential airline operators.
Source [News24]

Venter stated that the Law requires SAA to operate on a commercial basis in the domestic market, not a "public benefits basis". 

A Comair graphic illustrating South Africa's chequered aviation history
A Comair graphic illustrating South Africa's chequered aviation history since its deregulation in 1990. (Marise Lerm)
BusinessDayLive reported that Mr Venter said the presentation last week by SAA management and board members to the Parliamentary Portfolio Committee on Public Enterprises on the turnaround strategy had indicated to Comair that SAA had no tangible plan to alter its operations.  It was on this babsis that Comair had decided to institute legal proceedings.
"They have a 20-year plan, and that is probably worse than not having any plan at all, we were even more concerned (after the presentation)," Mr Venter said, adding that a plan with a 20-year horizon could not hold present management accountable for turning the airline around.
Source [BusinessDay]

In November, Venter had a public war of words with South African Minister for Public Enterprises, Malusi Gigaba, the minister responsible for overseeing SAA's operations in which Venter blamed Government, amongst other factors, and its continued financial support of SAA, for the demise of 1Time (T6).