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I’ll have SAA liquidated if they don’t pay – former Nationwide CEO

SAA purposefully eliminates competition, says Bricknell.

Vernon Bricknell who founded Nationwide Airline in 1995, and led it until it stopped operations and went into liquidation in 2008, is ready to apply for the liquidation of South African Airways (SAA) if the national carrier fails to pay more than R104 million in damages to Nationwide.

The South Gauteng High Court awarded Nationwide the damages on Monday following the ruling of the Competition Tribunal in 2010 that SAA abused its dominance in the local market and played a major role in the demise of Nationwide.

This ruling was later upheld in the Competition Appeals Court and formed the basis of the award on Monday.

Bricknell is one of Nationwide’s biggest creditors and will therefore be the largest beneficiary of the award, Bowman Gilfillan attorney Lucinda Verster told Moneyweb. She represented Nationwide and later its liquidators, from the start of Nationwide’s Competition issue with SAA in 2001.

SAA is facing a similar but much bigger claim from Comair. Closing arguments in that matter will be heard later this month. The amount claimed is R875 million plus interest, which might total R1.5 billion, Moneyweb learnt.

SAA’s precarious financial situation is well known. It has not published financial statements for 2014/15 or 2015/16 due to going concern issues and has only R99 million of its government guarantees still available. In December SAA requested a further R4.5 billion guarantee, but National Treasury has been reluctant to respond unless a new board is appointed.

Against this background Bricknell says he will for “damn sure” apply for SAA’s liquidation if it fails to pay the damages. “And I’m sure Comair will as well (if its claim is awarded but not paid).”

Comair would not comment on the matter while its case is still pending.

Bricknell said SAA “tried to put us out of business from the day we started.”

He is convinced that SAA is still “using every trick in the book” to eliminate competition and doing it with taxpayers’ money. “[It is] a R14 billion-government guarantee and is asking for a further R5 billion. And they still cannot make a profit.”

Bricknell says Nationwide was the longest running private airline in South Africa until it had to stop trading. He put a lot of money in it and the award would help him, “but it will not help that 15 years of my life was destroyed.”

He says he will never go into the airline industry in South Africa again, unless the playing fields are levelled and he would be spared fighting SAA with its deep pockets all the time.

He criticised the long delay in finalising the claim, saying it is “pathetic”. An antitrust case in Britain between Virgin and British Airways was finalised within a year, while this one took six years from the tribunal ruling in 2010.

Verster earlier told Moneyweb that SAA brought several interlocutory applications, which slowed down the process.

Bricknell said while the case dragged on, “everyone goes out of business”.

Vice president of sales and distribution of low-cost domestic airline FlySafair welcomed Monday’s ruling. “This imbues us with confidence in the state of the judiciary, especially in light of the current review of claims surrounding the unfair subsidisation of Mango by SAA, relating to aircraft leases,” Kirby Gordon said.

He said SAA’s incentives to travel agents that constituted the abuse of dominance in the Nationwide case is only one aspect of the potential abuse. “Travel agents only account for a certain proportion of tickets sold to the public, while a large number are sold through more direct channels.

“The question here then is to what extent potential predatory pricing practices might have been employed to create an unfair advantage – this is of course the subject of the investigation currently being conducted by the Competition Commission,” says Gordon.

SAA did not respond to a request for comment about the damages award and National Treasury indicated that it would not comment.

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Best thing the SAA board (and government) can do is to implement Business Rescue proceedings and use this as means to restructure the airline, and implement a constructive and sustainable turnaround strategy.

The board needs to be vigilant and consider its options. BR, I believe, (with an appropriately qualified BR practitioner(s)) will enable government to prevent propping up liquidity of the airline without a clear objective plan with short, medium and long term goals for turnaround, aiming at the least, to breakeven within the next 2 years. Putting a moratorium on creditors, will enable the board to better manage its liquidity and give it the necessary time to develop a robust and decisive plan and get the airline profitable over the next 3-5 years.

They should seriously consider this and avoid depleting the government and tax payer resources with “wasteful and fruitless spending”, where the direction for the future remains unclear.

What a bad idea – have the company swarming with overpaid consultants? Rather liquidate it and try to realise some money from selling off the assets. Routes can be auctioned off to other airlines.

Why would they consider that? They don’t give two hoots about profitability or otherwise, while they draw their fat board salaries, and the tax-payer mops up the bill.. Zuma put Myeni in her position as chair and no-one seems brave enough to get rid of her. We hear about Treasury wanting to re-appoint a new board, but that’s as far as it gets. Until Zuma goes, this type of incompetence will continue, and grow. Next to go will be the safety aspects, and SAA planes will become very dangerous. The wheels may well come off, figuratively, possibly the wings as well. As usual everything is politicized and is for the ANC’s benefit. That is not how to run a country nor any state owned enterprise.

Why should creditors be prejudiced?

Just liquidate asap.

Why bother with BR. Never works and rescuers just skim more money off top. Liquidate the corrupt lot of ANC lackeys.

Good, put it out of its misery. I’m sick and tired of reading about this failure of a company.

Sorry Mr.Bricknell, that seems how business is working. ” Small ” businesses are going down at the cost of other corrupt businesses that is not contributing anything to the economy. Some of us are really trying hard.

Time to liquidate this albatross around our necks!

Please. Please liquidate SAA, for no other reason that to put an end to this pathetic governments determination to reward incompetance.

Please!

I wish somebody would look carefully into these useless deploys of the ANCorruption. Somewhere along the way of their actions of wasted legal action these has to be some crime perpetrated on a personal basis. Their reckless actions waste millions of taxpayer funds which could be used to deliver more effective service to the poor in our country. How can they simply be let off for gross negligence and reckless actions? Anyone at OUTA reading this?

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