Low cost airline 1time on Friday filed for liquidation and cancelled its flights, after pulling the plug on a rescue plan. It is the latest casualty in the South African airline market, following the demise of Velvet Sky earlier this year.
1time, which operated flights within South Africa, said in August it had launched a turnaround plan to right its money-losing business.
“It is with regret that the board of directors of 1Time hereby advised shareholders that the company’s main trading company and subsidiary had filed for liquidation. The decision came after consultations with the business rescue practitioner where it was recognised and agreed that the business had no reasonable prospect of being rescued,” the company said in a statement to the stock exchange.
It said the decision to file for liquidation was taken after a potential financier said it would not be able to invest in the airline. “It is therefore with the utmost regret, disappointment and heartfelt disbelief that we have to file for liquidation, which means the end of a dream and an era for all of us,” 1time said.
“I sincerely thank our employees who worked so hard over the years to drive 1time’s business, the travel trade who have been steadfast in their support, and our passengers who carried and maintained 1time during our most difficult and trying financial times, your loyalty is appreciated,” stated Blacky Komani, 1time Group CEO.
“Although 1time ceases to exist, the airline that we’ve built up through blood, sweat, tears and undeniable passion, will live on in the hearts of our passengers and also our competitors, who know that they have lost a formidable and world-class player in the low cost market.”
1time’s Business Rescue practitioners will be in contact with creditors and future passengers to finalise all outstanding matters.
Hundreds of passengers were left stranded after the airline cancelled all its flights at 3:00 p.m on Friday.
The money-losing airline had R16 million in long-term debt on its balance sheet as of the end of December, according to Thomson Reuters data. Its total liabilities at the time came to R536 million.
1time reported a loss of R43.5 million for the six months to June 30, revealing a further decline in its earnings. The carrier reported a loss of R33.9 million for the same period last year.
The JSE-listed airline, which had about R320 million in short-term debt, began business rescue proceedings in August to seek protection from liquidation after it failed to convince creditors of its plans to return to profitability.
1time partly attributed its losses for the first half of 2012 to costs associated with new routes from Lanseria and Mombasa, both of which have since been suspended. Less than expected demand for maintenance at its Jetworx division also dented performance, the airline said.
Airlines have been hard hit by a combination of higher fuel prices, airport taxes and navigation fees and a recent fall-off in demand. Earlier this year newcomer Velvet Sky, a low-cost carrier operating from Durban, was forced to shut down after less than a year of operation after it failed to convince creditors and a court that it would be able trade its way back to profitability. In 2008 Nationwide airline announced it would halt flights.
Erik Venter, CE of Comair (which runs Kulula.com and British Airways in South Africa) said that ten out of eleven private airlines launched in South Africa since 1991 have failed. He attributed 1time’s demise mainly to its fleet of McDonnell Douglas aircraft, which are relatively old and inefficient – as fuel accounts for around 40% of an airline’s costs, this is a significant factor. Other local carriers, such as Comair, have been upgrading their fleets with modern, fuel efficient airliners in order to maintain profitability, but most local airlines have been facing difficult times.
1time passengers who used cards from local banks, such as Absa, FNB, Nedbank and Standard Bank, to buy 1time tickets will be able to get their money back after lodging a dispute with their bank.
1time’s stock dropped 70% to 3c by close of business on Friday.