1time “in distress”

3505

JSE-listed low-cost airline 1time has applied to the High Court for protection against its creditors after its board yesterday decided the company’s subsidiaries are financially distressed and need business rescue.

The board of 1time added in a statement “it is also of the view that there appears to be a reasonable prospect of rescuing these subsidiaries from their current difficulties. “The business rescue process will allow 1time to continue to operate while it prepares and implements a plan of reorganisation – to focus on its more profitable routes and to reorganise the business financially and strategically so that it can operate efficiently and sustainably while aiming to return to profitability and to emerge as a healthier company.”
1Time chief executive Blacky Komani told the paper that the airline would continue scheduled services. “For us it is business as usual and we will fly tomorrow and for the days to come,” he told Moneyweb.

The object of the business rescue is to dig the companies out of R320 million of short-term debt. The firm had been carrying the debt for two years. “It is money that we owe for services and for some operational costs. We [the new management] inherited it,” Komani told Business Day newspaper.

Earlier this month, 1time Holdings said it would co-launch Fresh Air, a low cost carrier for the Zimbabwe market, with scheduled flights expected to commence next month between Johannesburg and Victoria Falls. Under the arrangement with partner Nu-Aero, 1time will halt its flights on the Livingston-Johannesburg route and fly between Johannesburg and Victoria Falls, via Harare. This route would then become a Fresh Air operation. If the route were successful, the company would be able to apply for a second route after three months of operation.
1Time’s shares have fallen 91% over the past two years, from about 155c a share to close at 14c a share on Tuesday. South African airlines are facing increasingly tough conditions domestically, as demand softens and operating costs increase dramatically – airport fees have gone up and the high oil price is weighing heavily on profits. In April this year 1time said its loss widened to R157 million in
the year through December from R11.1 million a year earlier, mainly due to the congested local market.. “What we need is time to present a turnaround strategy for the business, which will be sold to creditors and investors,” Komani told Business Day.

Last year September, CEO and co-founder Glenn Orsmond resigned after heading the company for eight years. Orsmond told The Citizen that his departure was due to the fact that the airline “probably needs fresh ideas…I need a break.”

In March 2011 1time sealed a deal with a black economic empowerment consortium that would acquire a 25% stake in the group for nearly R50 million, which will be used to expand 1Time’s operations and acquire more aircraft. The consortium purchased 70 million shares worth R49 million, effective from March 2, the 1Time group said at the time. When first announced in November 2010, the deal was valued at R65.1 million. The consortium includes Mtha Aviation, SKMT Sunrise Investment Group and Oakleaf Investmetn Holdings. The latter was formed to acquire and hold the stake in 1Time, with Mtha Aviation owning the majority of Oakleaf. Sipho Twala, a founding shareholder and chairman of 1time, is also part of the BEE consortium.