planecrazi
18th Jul 2004, 09:36
Now SAA faces R275m lawsuits
National carrier is accused of deliberately shooting down rival airline
ANDRÉ JURGENS
SOUTH African Airways has been slapped with two potentially embarrassing lawsuits amounting to R275-million - shortly after the mysterious resignation of chief executive André Viljoen.
The national airline and top executives including Viljoen are being sued in the Johannesburg High Court - accused of plotting to seize control of struggling rival Sun Air and then deliberately shutting it down.
Two Cabinet ministers, Jeff Radebe and Stella Sigcau, as well as former Transnet managing director Saki Macozoma, have been subpoenaed to testify in the first Sun Air case, to be heard on August 10.
The joint liquidators of Sun Air are suing SAA, Viljoen and his predecessor as chief executive, Coleman Andrews, for up to R97-million. They say the money could have been raised by selling the collapsed airline's assets - but wasn't raised because SAA deliberately blocked the sale of the assets after it took control in 1999.
SAA this week refused to comment on whether Viljoen's abrupt but "amicable" departure last week had anything to do with the legal battles over Sun Air.
Viljoen will, however, feature prominently in the trial, according to documents filed in the High Court.
SAA faces a barrage of damaging allegations from the Sun Air liquidators, including claims that executives conspired to shut the airline down and that SAA benefited to the tune of at least R125-million from its "scheme".
SAA's takeover of Sun Air was allegedly intended to prevent a rival airline, particularly Virgin Atlantic, from reviving Sun Air and entering the market in competition with the national carrier. The liquidators claim SAA had no right to "take control" of Sun Air.
Asked whether SAA had declared the pending lawsuits as a "contingent liability" in its financial reports, the airline's vice-president of communications, Onkgopotse J J Tabane said: "We believe that it is inappropriate for SAA to comment in the detail that you require."
SAA is expected to deny in court that it attempted to "take control" of Sun Air in an underhand manner.
Minutes of an SAA board meeting held on July 23 1999 - which SAA lawyers claim is an incomplete transcript - are contained in the court file. Among the executives present, according to the minutes, were Maco zoma, Andrews and Viljoen.
Andrews is quoted as saying SAA's "highest objective" was to prevent Sun Air from falling into the hands of Virgin.
The minutes quote Andrews as saying: "I do think that if Sun Air is closed down on an orderly basis, we will probably pick up 75% to 80% of their traffic, which we think could boost our annual earnings by about R125- million and that's why it is a significant upside.
"If, on the other hand, they fall into the hands of Virgin... it's a big concern of ours."
Macozoma allegedly remarked that Sun Air should "... never have been privatised in the way it was".
Macozoma could not be reached for comment this week.
The second lawsuit is set for trial on November 19. Johannesburg businessman Robert Watson is claiming damages of R178-million from SAA.
In December 2001 Rethabile Leisure and Tourism ceded its claims against SAA to Watson. Rethabile had acquired a 35.75% share in Sun Air after government privatised the airline.
Watson's case alleges that SAA flooded the market with cheap airline tickets once it assumed "control" of Sun Air in 1999. This forced Sun Air to lower its ticket prices, as a result of which it suffered financial losses and eventually failed. Rethabile, and later Watson, were left out of pocket.
Viljoen, the airline's chief finance officer under Andrews, allegedly played a pivotal role in negotiating how SAA would acquire Sun Air.
SAA released a brief statement last week saying that Viljoen was leaving on "amicable" terms.
His departure also came after SAA suffered a R6-billion foreign currency hedging loss in 2002-03.
SAA paid for its new Airbus aircraft at a fixed exchange rate, believing the rand would remain weak against the dollar. The airline lost a fortune when the rand strengthened considerably.
More hedging losses have been predicted for the 2003-04 financial year.Now SAA faces R275m lawsuits (http://www.sundaytimes.co.za/2004/07/18/news/news01.asp)
National carrier is accused of deliberately shooting down rival airline
ANDRÉ JURGENS
SOUTH African Airways has been slapped with two potentially embarrassing lawsuits amounting to R275-million - shortly after the mysterious resignation of chief executive André Viljoen.
The national airline and top executives including Viljoen are being sued in the Johannesburg High Court - accused of plotting to seize control of struggling rival Sun Air and then deliberately shutting it down.
Two Cabinet ministers, Jeff Radebe and Stella Sigcau, as well as former Transnet managing director Saki Macozoma, have been subpoenaed to testify in the first Sun Air case, to be heard on August 10.
The joint liquidators of Sun Air are suing SAA, Viljoen and his predecessor as chief executive, Coleman Andrews, for up to R97-million. They say the money could have been raised by selling the collapsed airline's assets - but wasn't raised because SAA deliberately blocked the sale of the assets after it took control in 1999.
SAA this week refused to comment on whether Viljoen's abrupt but "amicable" departure last week had anything to do with the legal battles over Sun Air.
Viljoen will, however, feature prominently in the trial, according to documents filed in the High Court.
SAA faces a barrage of damaging allegations from the Sun Air liquidators, including claims that executives conspired to shut the airline down and that SAA benefited to the tune of at least R125-million from its "scheme".
SAA's takeover of Sun Air was allegedly intended to prevent a rival airline, particularly Virgin Atlantic, from reviving Sun Air and entering the market in competition with the national carrier. The liquidators claim SAA had no right to "take control" of Sun Air.
Asked whether SAA had declared the pending lawsuits as a "contingent liability" in its financial reports, the airline's vice-president of communications, Onkgopotse J J Tabane said: "We believe that it is inappropriate for SAA to comment in the detail that you require."
SAA is expected to deny in court that it attempted to "take control" of Sun Air in an underhand manner.
Minutes of an SAA board meeting held on July 23 1999 - which SAA lawyers claim is an incomplete transcript - are contained in the court file. Among the executives present, according to the minutes, were Maco zoma, Andrews and Viljoen.
Andrews is quoted as saying SAA's "highest objective" was to prevent Sun Air from falling into the hands of Virgin.
The minutes quote Andrews as saying: "I do think that if Sun Air is closed down on an orderly basis, we will probably pick up 75% to 80% of their traffic, which we think could boost our annual earnings by about R125- million and that's why it is a significant upside.
"If, on the other hand, they fall into the hands of Virgin... it's a big concern of ours."
Macozoma allegedly remarked that Sun Air should "... never have been privatised in the way it was".
Macozoma could not be reached for comment this week.
The second lawsuit is set for trial on November 19. Johannesburg businessman Robert Watson is claiming damages of R178-million from SAA.
In December 2001 Rethabile Leisure and Tourism ceded its claims against SAA to Watson. Rethabile had acquired a 35.75% share in Sun Air after government privatised the airline.
Watson's case alleges that SAA flooded the market with cheap airline tickets once it assumed "control" of Sun Air in 1999. This forced Sun Air to lower its ticket prices, as a result of which it suffered financial losses and eventually failed. Rethabile, and later Watson, were left out of pocket.
Viljoen, the airline's chief finance officer under Andrews, allegedly played a pivotal role in negotiating how SAA would acquire Sun Air.
SAA released a brief statement last week saying that Viljoen was leaving on "amicable" terms.
His departure also came after SAA suffered a R6-billion foreign currency hedging loss in 2002-03.
SAA paid for its new Airbus aircraft at a fixed exchange rate, believing the rand would remain weak against the dollar. The airline lost a fortune when the rand strengthened considerably.
More hedging losses have been predicted for the 2003-04 financial year.Now SAA faces R275m lawsuits (http://www.sundaytimes.co.za/2004/07/18/news/news01.asp)