SA Express now too needs governmental thrust
SOUTH African Express has become the next state-owned airline after SAA to seek a government bailout.
It is seeking government approval for a bank loan after entering insolvency and being unable to pay its debts.
SA Ex press has not released its annual financial statements for 2014.
An application had been sent to the Treasury to allow the regional carrier to borrow the money, Dipuo Letsatsi-Duba, the chairman of the government’s portfolio committee on public enterprises, said on Friday. The airline had put costsaving measures in place to curb waste, she said.
The carrier’s management said “agreements had been reached with service providers to address the challenge”.
The company did not immediately return a voice message seeking comment.
SA Express joins SAA in needing funds to stay afloat.
SAA is “technically bankrupt” and surviving off stateguaranteed loans, Public Enterprises Minister Lynne Brown has said. A 90-day recovery plan for SAA was handed to the government earlier this month.
SA Express operates a fleet of 24 Bombardier jets ranging in size from 50 to 74 seats. It flies within South Africa and to neighbouring countries including Zimbabwe, Namibia and Mozambique. Mango Airlines, SAA’s low-cost unit, is profitable and adding routes.
SA Express announced new routes on November 1 as part of its growth strategy of expanding operations into new untapped markets in and around South Africa. The routes are between Johannesburg and Pietermaritzburg, Johannesburg and Nelspruit, and Cape Town and George.
SA Express announced a net profit on the audited 2013 financial results despite tough global macroeconomic environment.
It made a significant turnaround by posting a net profit of R650 000 from an operating loss of R365.9 million in 2012.
But the carrier also saw a drop in cash in operations from R234.2m in 2012 to R133m in 2013.
SA Express said it was also gearing itself for growth in accordance with its long-term strategy. With the approved 15year strategy, it said it expected to update its fleet in the second half of 2014 with the next generation aircraft that would offer a comprehensive route network and improve operational costs.