The creditors of Jetworx, the aircraft maintenance subsidiary of 1time Holdings, have agreed to sell the company to the American Industrial Acquisition Corporation (AIAC), safeguarding 200 jobs for at least six months. However, the more than 500 jobs at 1time hang in the balance as local airlines try and prevent FastJet from taking over the grounded carrier.
Marius Croucamp, spokesperson of trade union Solidarity, said that 79% of Jetworx’s creditors voted in favour of the transaction. “The new owners are expected to come to South Africa next week and the necessary agreements will be drawn up. According to the business plan that Jetworx released earlier this month, its estimated 200 employees will keep their jobs for at least the next six months. We hope that Jetworx will now get more business and be in a position to retain its employees after this period, and that further retrenchments or restructuring will not take place at the company.”
Jetworx retrenched nearly 200 of its estimated 400 employees before it was placed under business rescue in August 2012, Solidarity said. Retrenchments were halted while it was under business rescue. After 1time had been placed under provisional liquidation, Jetworx was, however, forced to consider further retrenchments.
Meanwhile, there is uncertainty regarding the future of 1time’s roughly 540 former employees. Last year FastJet signed an option agreement to buy 1time after it was placed under provisional liquidation.
1time submitted an application to the Air Services Licensing Council (ASLC), a division of the Department of Transport, to include FastJet in its shareholding so FastJet can become the majority shareholder of 1time.
Marius Croucamp, spokesperson of Solidarity, said “In terms of legislation…the shareholding of a local airway must be structured in such a way that South African residents retain 75% of the right to vote. However, it seems that FastJet wants a majority share in the company which could result in the failure of the transaction, which would in turn mean that there is no further hope for the nearly 540 people who lost their jobs when 1time closed its doors.
“1time submitted an application not to be subject to this specific condition of the legislation. The minister of transport can, by law, instruct the ASLC to make an exception and award a licence even if the airway’s shareholders are not South African residents.”
Croucamp said that Solidarity is concerned that the minister will decide against such a concession. “Strict legislation and the state’s monopolistic behaviour in the airway industry, which includes the state’s continued financial support of South African Airways (SAA), forces free-market competitors out of the market. The demise of SAA’s competitors also serves as an important deterrent to potential investors who would perhaps still have wanted to enter the aviation industry.”
According to Croucamp it will be clear, if the minister does not make the concession, that government will protect SAA at all costs and that there is no place for other airways in the South African aviation industry.
The ASLC will meet next month to hear arguments for and against the transfer of 1time to FastJet, which would incorporate 1time as a subsidiary of its pan-African airline venture.
South African airlines are against the FastJet takeover, with SAA’s low cost subsidiary Mango saying that there was a “high probability of other domestic airlines, with capital commitments on replacement and new aircraft, defaulting” if FastJet was allowed to take over 1time.
Mango warned that over-capacity led to the demise of both 1time and Velvet Sky, which both went bust last year. State-owned South African Airways (SAA), which is relying on R5 billion in state loan guarantees to stay afloat, is also opposed to the FastJet move.
Meanwhile, Comair, which operates kulula.com and British Airways in South Africa, has also filed objections at the ASLC.