South Africa’s Supreme Court of Appeal dismisses Airlink’s claim against SAA

December 01, 2020: Though disappointed, Airlink respects the Supreme Court of Appeal’s decision to dismiss its claim against South African Airways (SAA) with costs.

This follows Airlink’s application to the Johannesburg High Court in January for leave to sue the state-owned airline, which had then just recently been placed in business rescue, and for a declaratory order that would compel it to return ZAR510 million of funds from ticket sales that SAA had collected on Airlink’s behalf.

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While Airlink fully respects Supreme Court of Appeal’s order dismissing the case, it is nonetheless disappointing and demonstrates that the law is not always just. It has always been Airlink’s firm view that the funds collected by SAA on Airlink’s behalf, was never for SAA to keep or spend. However, SAA has been able to hide behind the legal veil of business rescue, to withhold and consume Airlink’s money, even though it had no legitimate commercial or transactional basis for doing so.

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Unlike other trade creditors that are owed money by SAA for goods supplied or services rendered, Airlink’s claim relates to funds collected on its behalf by SAA for services Airlink provided to its own customers. Under the twenty-three year old franchise agreement between the two airlines that existed at the time, Airlink tickets were sold and ticketed through SAA’s computer reservations system and SAA was obliged to collect and temporarily hold the funds and pay them over to Airlink in monthly tranches for those tickets flown in the preceding month. Airlink in turn paid SAA for those services rendered.

SAA defaulted on remitting funds for tickets flown in November but owed in December. Shortly after entering business rescue, SAA made it clear it would not honour the terms of its agreement with Airlink. This prompted Airlink to terminate the franchise (it ended in June 2020) and to rebuild its business independently of SAA.

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Airlink will study the judgment and consider its options.

In the meantime, Airlink is focused on rebuilding its business which was ravaged by SAA’s default and the national lockdown regulations that decimated the air travel and tourism industries.

Airlink recently unveiled its new livery and is in the process of launching and resuming flights on a number of new and reinstated domestic and regional routes across Southern Africa. It has also entered into commercial agreements with some of the world’s leading airlines including Qatar Airways, Emirates, Air France-KLM, British Airways and United, which enable it to develop new traffic feeds plugging into the world’s biggest global networks.