Comair loses bid in High Court to stop SAA bailouts

The airline had argued that it was unfair that SAA had the financial support of government.

A South African Airways flight takes off as another one is parked in a bay on the tarmac on 25 May, 2010 at the Johannesburg O.R Tambo International airport in Johannesburg, South Africa. Picture: AFP.

JOHANNESBURG - Comair has lost its bid in the High Court in Pretoria to have government's loan guarantees to South African Airways (SAA) set aside.

The airline had argued that it was unfair that SAA had the financial support of government when it was running at a continued loss.

Comair said the bailouts did not comply with the Domestic Air Transport Policy or the Public Finance Management Act.

SAA has received more than R30 billion in government guarantees and loans since 1999.

Government granted SAA a R5 billion guarantee in 2012, the latest in a number of moves to make sure that the struggling airline survives. However, one of the conditions was that a turnaround strategy had to be developed.

Meanwhile, the Free Market Foundation says today's ruling that government can continue to bail out SAA through loan guarantees is scary for all South Africans as it allows ministers to re-allocate money already allocated by Parliament.

The foundation's head Leon Louw said, "It seems the struggle for power has been struck down in that the executive branch of government is essentially being given not just fiscal power but the ability to divert money budgeted by Parliament."

In January this year, Finance Minister Nhlanhla Nene said SAA would receive another R6,5 billion as the airline struggled to keep its head above water.

Comair argued that the bailouts were unfair and against the law, but Judge Hans Fabricius dismissed the application, with his full reasons expected to be released soon.

SAA, Eskom and the Post Office have all been singled out as priority areas by government as all three struggle to survive.