Comair Limited, one of South Africa’s leading aviation companies listed on the Johannesburg Stock Exchange is challenging the validity of a five billion rand government guarantee for the national airline.
South African Airways (SAA) received a five billion rand government guarantee following the signoff by two cabinet ministers.
According to media reports, the national airline has received more than 30 billion rand in government guarantees since 1999.
[DATA COM:Comair Limited] is challenging the move saying it compromises a level playing field.
“We are looking for a level playing field,” Comair chief executive Eric Venter told CNBC Africa.
“It’s not much about the raising of finance but more about what you can afford to do commercially as a competitor when you have this unlimited pot of money and other players are constrained by the risk of bankruptcy,” he added.
“Most countries have a legislative framework to govern the competitive effect of state funding unlike South Africa where we rely on parliament to look at the factors around funding.”
Venter questioned the decision by two ministers to sign SAA guarantees without taking the decision through a parliamentary process as it involved tax payers’ money.
“What we are challenging is that SAA is being funded by guarantees signed by simply two ministers and is not going through parliament,” he added.
According to Venter, the minister of finance said it was unlikely that SAA will be able to pay back these loans.
Venter said it was an expense for some private actors in the aviation space to launch a legal bid against the government and SAA.
“Unless you have huge amount of money to launch a court battle with the government largely funded by tax payers’ money it becomes for most players to take such cases to the courts.”