The Airports Company of SA (Acsa) was blamed for low-cost airline 1Time’s demise.
1Time was put under provisional liquidation by the North Gauteng High Court yesterday after a failed attempt to rescue the business.
Business rescue allows companies in financial distress to be rehabilitated under supervision and subject to a court order.
“Acsa was only interested in recovering all its debts without considering the ripple effect this might have on the airline’s operations,” said 1Time’s business rescue practitioner Gerhard Holtzhauzen.
Acsa was the airline’s largest creditor, claiming R147 million, and had an “overall negative attitude”.
The company forced 1Time to pay for current services in cash the day after service was rendered, and in advance over weekends and public holidays.
“The aforementioned payment terms constrained 1time’s cash flow,” Holtzhauzen said.
“To make matters worse the reconciliation done by Acsa set off payments received to historic debts, despite the historic claims being ring-fenced.”
As a result, shareholders were reluctant to take up a rights issue in 1Time Holdings, which would have boosted the struggling airline by about R80 million.
A major international airline company had expressed interest in acquiring the airline. But the timing and transfer of the business, as well as its short term cash requirements, had caused it to back out.
In addition, 1Time’s old aircraft were not nearly as fuel efficient as more recent models.
With fuel costs constantly rising, this put additional strain on the business’s profitability.
“In the early stages of the business rescue process, ticket sales were on an acceptable level to sustain the airline’s daily operations,” he said.
Later, ticket sales decreased, contributing to the loss of profitability and higher cost to keep the aircraft in the air.
Last Friday, 1Time had an operating cash shortfall, which would have increased the following week.
“The impact decision to ground all aircraft and suspend the service with immediate effect was taken to ensure that 1Time’s safety would not be compromised,” Holtzhauzen said.
As a result, minimal warning was given, and operations were shut at 3pm.
Provisional liquidators Hannes Muller and Aviwe Ndyamara, from Tshwane Trustess, would now take over from Holtzhauzen.
Provisional liquidators can recommend to the court the liquidation order be lifted and the company resuscitated, or that the airline be placed in final liquidation.
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