LOW-COST carrier Skywise says it has secured a consortium of "big investors" from the Middle East, but before finalising the investment, it wants to resolve "red-tape issues" including its recent grounding by Airports Company SA (Acsa) over airport fees.
This is the latest attempt by the embattled airline to remain airborne in a highly competitive sector plagued by several airline collapses, with market leader South African Airways (SAA) surviving on state support.
Last month, the Financial Services Board shot down Skywise’s attempt at a crowd-funding scheme when the airline set up a website on which it offered 1,500 shares at R100,000 each and gave potential investors three days to buy in without first viewing the airline’s share prospectus — a contravention of the Companies Act.
The airline, which launched in February last year with Johannesburg to Cape Town flights, has instituted legal proceedings against Acsa, claiming damages for an alleged breach of contract.
Acsa grounded Skywise last month over its failure to pay about R4m in airport fees relating to the landing, take-off and parking of aircraft and related service charges.
The airline said it had a "pay-as-you-go" arrangement with Acsa that allowed it to clear its arrears and had only missed one payment of R1.6m, for which it sought an extension from the airports company.
But this was not the first time Acsa had grounded Skywise. In October, the airline was also prevented from taking off over unpaid airport fees. The airline has not been flying since it was grounded in December.
Skywise has also registered a case against Acsa with the Competition Commission, alleging that Acsa’s decision to prevent it from taking to the skies was an "abuse of dominance" and a "prohibited practice".
The airline has also accused Acsa of giving preferential treatment to troubled national carrier SAA. This comes as media reports referred to SAA owing Acsa more than R50m in airport fees that it reportedly intended to pay off at the end of this month.
SAA’s liquidity is in question as Citibank this week cancelled a R250m unsecured short-term banking facility with it.
The Treasury said on Monday it was working closely with the state-owned SAA to secure sufficient funding so that the airline did not run out of cash.
This is not the first time a competitor has raised questions about government support given to SAA.
Last year, JSE-listed Comair’s challenge of a R5bn government guarantee granted to SAA in 2013 was set aside by the High Court in Pretoria.
Comair is the British Airways franchisee that operates low-cost carrier kulula.com. It had sought to have the guarantee set aside on the grounds the facility contravened a number of laws and policies including the Public Finance Management Act, the Constitution along with the government’s Domestic Aviation Transport Policy.
Skywise argues that it had paid a R1.9m deposit to Acsa at the beginning of last year, and was, therefore, not in arrears when it failed to pay the instalment of R1.6m that led to Acsa preventing Skywise from flying last month.
The airline said it has lost more than R50m in projected revenue over the December period due to not being able to fly.
"If it is because of management or the operating or business model that Skywise was grounded, then Acsa needs to do the same to SAA," said Skywise joint chairperson, Tabassum Qadir.
She said the consortium of investors in the Middle East was ready to invest in Skywise and pay off its liabilities as they believed the airline was a good investment opportunity.
However, she wanted to "fight" some red-tape issues so that the airline would not be grounded again after receiving investment.
Skywise was established by the founders of bankrupt airline 1time, but Pak Africa, an aviation investment company, bought 1time’s air service licence agreement last year with the intention to launch regional flights.
Pak Africa is also in the process of acquiring the brand and the JSE-listed shell company of 1time Airlines, which it has been eyeing for the past six years.
In a statement, Acsa said on Wednesday it was aware of all "allegations and legal proceedings" instituted against it by Skywise.