Unfair verdict? Airlink loses R827 million to SAA

SAA received a reprieve this week when the High Court in Johannesburg ruled in its favour against Airlink, which is owed R890 million in passenger airfares by the national flag carrier.

Prior to SAA entering business rescue, it had a franchise agreement with Airlink in terms of which Airlink operated its own flights using the SAA flight codes and SAA’s booking systems to reserve seats and collect money.

SAA didn’t pay back the money, went into business rescue and per the high court, Airlink is only entitled to R63 million, equivalent to the seven cents in the rand payout that some creditors received while others, who had government guarantees in place, suffered no losses.

Airlink confirmed that it had received no funds from SAA yet. Industry insiders say the ruling lets SAA walk away scot-free, unfairly.

They likened it to selling a house, where the funds are first deposited into an attorney’s trust account for safekeeping before the seller gets the money.

A source said SAA was merely a temporary keeper of Airlink’s money and, thus, Airlink was not a creditor of SAA.

“It is just theft, plain to see,” said the Democratic Alliance’s Alf Lees, who pointed out that Airlink was never on the business rescue list of concurrent creditors.

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SAA said that Airlink argued that payment owed for flown and unflown tickets before SAA went into business rescue in 2019 should not be treated as “pre-commencement debts” under the business rescue process, which would make Airlink a concurrent creditor under the business rescue plan.

“The ruling by the high court is completely wrong,” said Lees.

A source said that SAA had resorted to semantics to wiggle out of its debt.

Aviation analyst and editor of SA Flyer Guy Leitch said the judgment would have to be respected and that it was likely a challenge to navigate the intricacies of the law.

“The outcome was unfair to Airlink though, as the airline carried the passengers in good faith and SAA owes them the money,” he noted.

Airlink chief executive Rodger Foster said: “Airlink respects the court’s decision. It is, after all, the duty of the company’s leadership to explore every available avenue to recover the funds.

“Meanwhile, we will continue to focus on growing Airlink as an independent, financially robust, commercially vibrant, competitive and sustainable airline.”

Airlink has challenged the state-owned carrier twice before on the matter, unsuccessfully.

SAA interim boss John Lamola said: “We welcome the judgment and hope this finally lays this matter to rest.”

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A ruling against SAA would have cost the airline its alleged R500 million profit, a surplus that neither the airline, National Treasury nor the department of public enterprises were able to provide evidence of when queried by The Citizen.

Lamola said the airline had turned over a new leaf.

“The airline you see today is a very different one that has had to rebuilt itself from the ground up.

“Today’s judgment is another step in helping us conclusively turn the page on that chapter as we move toward becoming a more sustainable, resilient business, with new routes on the horizon.”

Lees said the extent that SAA went to get out of what he sees as a legitimate claim by Airlink is likely to turn off potential business partners of SAA.

“I would not risk doing business with a company that doesn’t want to settle its obligations. The only way I would, as a partner to SAA, do business is under the protection of a government guarantee.”