Business 11.8.2016 07:28 am

‘I’ll have SAA liquidated if they don’t pay’

SAA. Picture: Shutterstock

SAA. Picture: Shutterstock

Former Nationwide CEO is convinced that SAA is still ‘using every trick in the book’ to eliminate competition and doing it with taxpayers’ money.

Vernon Bricknell, who founded Nationwide Airline in 1995 and led it until it stopped operations and went into liquidation in 2008, is ready to apply for the liquidation of SAA if the national carrier fails to pay more than R104 million in damages to Nationwide.

The South Gauteng High Court awarded Nationwide the damages on Monday following the ruling of the Competition Tribunal in 2010 that SAA abused its dominance in the local market and played a major role in the demise of Nationwide.

This ruling was later upheld in the Competition Appeals Court and formed the basis of the award on Monday.

Bricknell is one of Nationwide’s biggest creditors and will therefore be the largest beneficiary of the award, Bowman Gilfillan attorney Lucinda Verster told Moneyweb. She represented Nationwide and later its liquidators from the start of Nationwide’s competition issue with SAA in 2001.

SAA is facing a similar but much bigger claim from Comair. Closing arguments in that matter will be heard later this month. The amount claimed is R875 million plus interest, which might total R1.5 billion, Moneyweb learnt.

SAA’s precarious financial situation is well known. It has not published financial statements for 2014/15 or 2015/16 due to going concern issues and has only R99 million of its government guarantees still available. In December SAA requested a further R4.5 billion guarantee, but National Treasury has been reluctant to respond unless a new board is appointed.

Against this background Bricknell says he will for “damn sure” apply for SAA’s liquidation if it fails to pay the damages.

“And I’m sure Comair will as well (if its claim is awarded but not paid).”

Comair would not comment on the matter while its case is still pending.

Bricknell said SAA “tried to put us out of business from the day we started”.

He is convinced that SAA is still “using every trick in the book” to eliminate competition and doing it with taxpayers’ money. “[It is] a R14 billion government guarantee and is asking for a further R5 billion. And they still cannot make a profit.”

Bricknell says Nationwide was the longest-running private airline in South Africa until it had to stop trading. He put a lot of money in it and the award would help him, “but it will not help that 15 years of my life were destroyed”.

He says he will never go into the airline industry in South Africa again, unless the playing fields are levelled and he would be spared fighting SAA with its deep pockets all the time.

He criticised the long delay in finalising the claim, saying it was “pathetic”. An antitrust case in Britain between Virgin and British Airways was finalised within a year, while this one took six years from the tribunal ruling in 2010.

Verster earlier told Moneyweb that SAA brought several interlocutory applications, which slowed down the process.

Bricknell said while the case dragged on, “everyone goes out of business”.

Vice-president of sales and distribution of budget domestic airline FlySafair welcomed Monday’s ruling.

“This imbues us with confidence in the state of the judiciary, especially in light of the current review of claims surrounding the unfair subsidisation of Mango by SAA, relating to aircraft leases,” Kirby Gordon said.

He said SAA’s incentives to travel agents that constituted the abuse of dominance in the Nationwide case was only one aspect of the potential abuse. “Travel agents only account for a certain proportion of tickets sold to the public, while a large number are sold through more direct channels.

“The question here then is to what extent potential predatory pricing practices might have been employed to create an unfair advantage – this is of course the subject of the investigation currently being conducted by the Competition Commission,” says Gordon.

SAA did not respond to a request for comment about the damages award and National Treasury indicated that it would not comment.

 

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