Comair blasts government bailout of SA Express


Privately-owned aviation company Comair has blasted government intervention and financial aid for state–owned airlines after SA Express moved to finalise a R539-million guarantee last week.

This latest bailout comes after SA Express reported a R187-million loss for the 2010/11 financial year, when its financial report was finally tabled late last month. The airline said funds would be used to cover short– and long–term loan facilities and against working capital and operating expenditure.

But Comair Chief Executive Officer, Erik Venter, said SA Express’ appeal was “bizarre”, particularly given the ongoing opposition to government’s approval of a R5-billion guarantee for South African Airways.

He added that any impending merger of management operations at South African Airways, SA Express and Mango, widely expected to be announced this month, could fall foul of local competition laws.

SA Express has reportedly been given until the end of the month to present to government before a decision would be finalised. And while Comair’s legal challenge to the SAA deal is already underway, Mr. Venter said the company “would have to look at taking the exact same approach” should government grant SAX its request.

Whether both deals are challenged at the same time will depend on whether government does in fact pursue plans to merge its aviation assets, Mr. Venter said, but insisted any such measure would in itself be questionable: “To start with we have this very dodgy practice of government guarantees but on the merger issue, I wonder whether the Competition Commission would turn a blind eye.

“SA Express was established as a separate company and meant to operate at arm’s length. Mango too was formed with guidelines to try and maintain a level of competition… You would have three CEOs from different airlines sitting around the table. If we did that, we would be hammered,” he said.

The Department of Public Enterprises was unavailable for comment.