Gordhan: SA Express flights to take off next week
Flying. (Duncan Alfreds, Fin24)
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Grounded SA Express will be ready to take off next week, said Public Enterprises Minister Pravin Gordhan.
He was briefing the portfolio committee on public enterprises in Parliament on Wednesday, on the progress made in addressing governance challenges at various state-owned enterprises.
Speaking on SA Express, which was grounded on May 24 after the South African Civil Aviation Authority (SACAA) suspended the entity’s Air Operator Certificate, Gordhan said that the airline is now in a “happy situation” as all processes to get it flying again have been concluded.
“The first flights will begin next week,” Gordhan told MPs. Gordhan said that the airline plans to initiate two routes next week and possibly add more routes on a weekly basis.
READ: SA Express can take off again – with only 2 aircraft
SACAA recently reinstated the certificate and SA Express has permission to fly two aircraft. According to the department’s presentation, once operations at the airline resumes it will build on its flight schedule.
Gordhan also expressed gratitude toward the new interim CEO Siza Mzimela who took on the position “free of charge”, volunteering to help turn around the situation at the airline. Previous interim CEO Matsietsi Mokholo took a position in the Presidency. The new board is tasked with recruiting a permanent CEO and CFO.
The airline is still facing liquidity and solvency challenges. Government has provided SA Express with a guarantee of R1.74bn – but the department has warned that immediate recapitalisation is required.
SA Express is also finalising its annual financial statements for the 2016/17 and 2017/18 financial years, due to going concern challenges.
Among the other challenges are the high cost structure of the airline as well as the grounding, which impacted revenue generation. There are also a high level of corrupt and dubious contracts which have been identified.
READ: Siza Mzimela appointed acting CEO of struggling SA Express
Over the past five months, the airline has been working on renegotiating unfavourable contracts with suppliers, reducing employee costs, renegotiating better fuel rates and will be working on a need commercial agreement with SAA.
Gordhan spoke about the consolidation of the three airlines SAA, SA Express and Mango to save costs and ensure their sustainability.
The first step of consolidation has taken place with SAA having moved back to the department of public enterprises. Now all airlines will account to one department, said Gordhan.
The boards of the airlines are looking to address technical, fuel and route rationalisation, Gordhan explained.
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