A STINGING cocktail of high fuel prices, fierce competition, weak demand and steep spikes in airport and navigation taxes has forced listed airline 1time Holdings to file for business rescue.
Earlier this year, Velvet Sky, which operated for less than a year, went into liquidation after failing to convince a court it was a candidate for business rescue.
The holding company’s subsidiaries, 1time Airline and Jetworx Aircraft Services, required business rescue as they were "financially distressed", 1time Holdings’ board said yesterday.
The low-cost airline would continue with its scheduled services, said 1time CEO Blacky Komani.
The firm had about R320m in short-term debt and had been in negotiations with creditors since March. "We couldn’t agree with some of the creditors and the next alternative is to file for business rescue, which is what we have done," Mr Komani said.
The firm had been carrying the debt for two years. "It is money that we owe for services and for some operational costs. We (the new management) inherited it."
Earlier this year, the last two of 1time’s founding directors resigned from the board and sold off much of their holdings.
1Time’s shares have fallen 91% over the past two years, from about 155c a share to close at 14c a share yesterday.
In April, the company reported a R157m loss for the year to end-December. It said it was implementing a turnaround strategy that would return the company to profitability in three years. This would include cutting unprofitable routes and renegotiating expensive, dollar-denominated aircraft leases.
"What we need is time to present a turnaround strategy for the business, which will be sold to creditors and investors," Mr Komani said.
"Business rescue gives you protection from creditors that may want to file for liquidation while you are turning the business around."
1Time had selected its preferred business rescue specialist, who would supervise the firm for the next few months and was waiting for approval from the Companies and Intellectual Property Commission, Mr Komani said.
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