SAA must pay Comair R554m plus interest
• Struggling airline fined for anticompetitive behaviour
Cash-strapped SAA was hit with a R1.16bn fine, adding to its struggle to remain as a going concern. The High Court in Johannesburg ruled on Wednesday that SAA must pay Comair R554m, plus years of interest, for engaging in anticompetitive behaviour between 1999 and 2005. SAA said it was studying the judgment.
Cash-strapped South African Airways (SAA) was hit with a R1.16bn fine, adding to its struggle to remain a going concern.
On Wednesday, the High Court in Johannesburg ruled that SAA must pay Comair R554m, plus years of interest, for engaging in anticompetitive behaviour between 1999 and 2005.
While Comair warned its shareholders SAA may appeal the judgment, the civil claims once again raised fears yet another bailout would be required to keep SAA solvent.
SAA said it was studying the judgment, but noted this was a “legacy issue” under different management and the airline had put in place new business rules.
SAA was given a list of stringent conditions attached to a further R4.7bn guarantee it received in September last year, when its board agreed to proceed with a process to stabilise operations and finances, including possible rationalisation of three state-owned airlines.
In August, Nationwide Airlines – which went into liquidation in 2008 – won its claim for R325m. SAA said on Wednesday it had settled that matter and did not intend to appeal.
The airlines lodged civil claims based on a 2006 Competition Appeals Court ruling that SAA had engaged in anticompetitive behaviour by paying commissions to travel agents in order to incentivise them to divert customers to SAA flights.
The civil litigation was the first based on a Competition Tribunal ruling.
The Competition Appeal Court had ultimately concluded that SAA could demonstrate no reason why the scheme, which saw SAA capture highvalue customers and grow its revenue by a threefold differential over competitors, would drive technological innovation in the sector.
On Wednesday, Comair CEO Erik Venter said the company would study the judgment before giving detailed comment. “We pursued this case because a dominant carrier had abused its position in the market to the detriment of its competitors, their shareholders and employees and the flying public.”
SAA is expected to have finalised amendments to its turnaround plan in February, ahead of the end of its financial year of March 31. Further details of SAA’s status may be contained in Finance Minister Pravin Gordhan’s budget speech next week.
DA finance spokesman Alf Lees said a presentation by SAA to Parliament at the end of 2016 had not showed any accounting for the possible damages, but the party was more concerned about how SAA’s internal auditors had accounted for the airline’s “going concern” status.
The party would approach the Independent Regulatory Board for Auditors (IRBA) to request they conduct an investigation into the failure of the SAA auditors to qualify the 2015-16 SAA annual financial statements.
The party also wants answers on 15 internal and external investigations conducted at SAA, including two concluded in 2015 probing the relationship between Mango and SAA.
These investigations looked at the relationship in terms of aircraft leasing and operational associations. South African airlines have previously accused SAA of engaging in further anticompetitive behaviour with regards to how aircraft are leased to Mango, with questions over to what extent SAA — subsidised by the taxpayer — is subsidising Mango.
SAA has levelled its own charges of uncompetitive practice against Comair in 2015, based on that airline’s allegedly litigious behaviour against competitors. SAA did not comment further on this on Wednesday.
Comair also declined to comment on this, while the Competition Commission did not respond to requests for comment by the time of the article’s publication.
NATIONWIDE AIRLINES – WHICH WENT INTO LIQUIDATION IN 2008 – IN AUGUST WON ITS CLAIM FOR R325M