Home South African Struggling SAA gets an almost half-a-billion rand reprieve

Struggling SAA gets an almost half-a-billion rand reprieve

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SAA got a reprieve of almost half a-billion rand after the appeal court dismissed an application by Airlink to compel SAA to return funds it was allegedly not entitled to retain or spend.

SAA yesterday got a reprieve of almost half a-billion rand after the appeal court dismissed an application by Airlink to compel SAA to return funds it was allegedly not entitled to retain or spend. Photo: REUTERS

TROUBLED national carrier SAA on Tuesday got a reprieve of almost half a-billion rand after the appeal court dismissed an application by Airlink to compel SAA to return funds it was allegedly not entitled to retain or spend.

The Supreme Court of Appeal dismissed with costs an application by Airlink, launched in January, for leave to sue SAA.

The independent and privately-owned airline was also seeking a declaratory order that would compel SAA to return R430 million of funds from ticket sales that SAA had collected on Airlink’s behalf.

The decision followed that of the South Gauteng High Court in March which dismissed Airlink’s application which sought to have certain revenue held by SAA released to it.

Airlink was an SAA code-share and franchise business partner, and tried to interdict SAA’s business rescue plan after the State-owned carrier was placed under business rescue in December. In terms of these agreements, Airlink’s passengers could book and buy their flight tickets through SAA operated platforms.

SAA would pay over to Airlink revenue received for these ticket sales on the 7th working day of the month following the purchases.

SAA, however, defaulted on remitting funds for tickets flown in November, but owed in December.

When SAA was placed under business rescue last year it had not yet paid over to Airlink the funds received for ticket sales for the preceding month.

Shortly after entering business rescue, SAA made it clear it would not honour the terms of its agreement with Airlink.

When Airlink demanded payment, SAA’s business rescue practitioner Les Matuson said the money could not be paid over to Airlink as they constituted a pre-commencement debt.

In an 18 page judgment, Supreme Court’s Justice Nambitha Dambuza said the two companies were in a mutually supportive relationship and that there was no agency relationship between Airlink and SAA.

“After the commencement of business rescue SAA and Airlink concluded an ad hoc agreement in terms of which SAA would remit to Airlink, on a daily basis, the moneys received in respect of Airlink’s ticket sales after the start of business rescue,” Dambuza said. “Nothing in the relationship between SAA and Airlink resembled agency.”

SAA has recently been capitalised with a R10.5 billion injection to assist with its business rescue process so it could take to the skies again next year.

Rescuers Matuson and Siviwe Dongwana were not immediately available for comment. Airlink, however, said it was disappointed, but respected the Supreme Court of Appeal’s decision.

Airlink said it would study the judgment. “While Airlink fully respects the Supreme Court of Appeal’s order dismissing the case, it is nonetheless disappointing and demonstrates that the law is not always just,” it said.