A new bidding process for the rescue of provisionally liquidated South African Express (EXY, Johannesburg O.R. Tambo) will open this week based on a re-evaluation of the airline's "intangible assets", according to the legal representative of the provisional liquidators.
This comes ahead of a liquidation court hearing of the state-owned regional airline now set for July 4, 2022, after it was postponed seven times since the airline was provisionally liquidated in April 2020.
It had been placed in bankruptcy protection on February 6, 2020, due to financial pressures that resulted from poor management and state capture. The South African government had provided ZAR1.5 billion rand (USD100 million) to the airline during the 2018/19 financial year to address solvency and liquidity problems, but its liabilities on provisional liquidation extended to more than ZAR900 million (USD60.1 million). Several incidents of corruption at the carrier, including kickbacks for a ground-handling contract and suspect airport contracts, were uncovered during South Africa's Zondo Commission into state capture.
Provisional liquidator Aviwe Nyamara was not available for comment, but his legal representative said intangible assets such as certain route rights were now in play. Three parties – in addition to the previous preferred bidder FlySAX – have expressed renewed interest. Advertisements for the new bidding process will be published this week.
The effective mothballing of some of SA Express's regional route rights has been a controversial issue raised before South Africa's International Air Service Licensing Council, even before the body became defunct for a year due to regulatory bungles. Local airlines saw their aspiration for regional routes frustrated because SA Express and Mango Airlines (MNO, Johannesburg O.R. Tambo) (in business rescue) still held route rights, although they are no longer in business. The regulator was was recently reinstated but faces a year-long backlog of applications.
SA Express's material assets, including its fleet of eight CRJ200ERs, have been auctioned off for close on ZAR25 million (USD1.6 million), and its licenses and certifications have expired.
Despite several attempts, FlySAX, a special purpose vehicle created by former employees intent on saving the SA Express brand, failed to raise the balance of ZAR26 million (USD1.7 million) of the ZAR50 million (USD3.3 million) purchase price of the airline.
By January this year, FlySAX and Ndyamara were engaged in a public spat about the entity's unsuccessful attempts to provide proof of funding and satisfactory guarantees, while the former employees accused him of deliberately frustrating their plans.
The impasse appears to have been resolved, according to a statement issued by FlySAX. In it, spokeswoman Thabasile Sikakane acknowledged FlySAX initially had failed to meet the requirements of financing the full balance of the purchase price. "After recurring efforts of revising the offer, we have subsequently resolved this ambiguity with the liquidators. After careful and considerate evaluation, the liquidators have finally allowed us to follow the due procedure. However, we do understand that this may result in the opening and submission of a new bid process to remain fair with other potential bidders, and we gladly accept the challenge," she said. "Our end goal is to see the revival of SA Express, and may the best bid succeed."
