February 13, 2020 / 1:50 PM / 4 days ago

UPDATE 1-South African state airline SA Express under bankruptcy protection

(Adds detail, context)

JOHANNESBURG, Feb 13 (Reuters) - South African state airline SA Express is under a form of bankruptcy protection known as business rescue, a spokeswoman for the airline said on Thursday.

Her comments come after SA Express lost a court battle with a contractor, logistics firm Ziegler, earlier this month.

SA Express, which flies to domestic and regional destinations, is a separate business from much larger state carrier South African Airways (SAA), which entered business rescue in December.

Under business rescue, a restructuring expert takes over the management of a distressed company to try to salvage the business or at least deliver a better return to creditors than a formal liquidation.

“The business rescue process is well-coordinated with no disruptions to customers and employees,” SA Express said in a statement.

On Feb. 6, a South African court ordered that SA Express be placed in business rescue after Ziegler argued that the airline was unable to pay its debts.

SA Express said at the time that it would appeal the court order. It was not clear whether SA Express had decided against lodging the appeal and SA Express spokeswoman Mpho Majatladi declined to elaborate.

Ailing state companies are one of the biggest challenges facing President Cyril Ramaphosa, who will deliver an annual state of the nation address on Thursday.

SAA’s restructuring team plans to cut some domestic and international routes, renegotiate contracts with suppliers and consider asset sales as part of efforts to rescue the airline. (Reporting by Alexander Winning; editing by Olivia Kumwenda-Mtambo, Kirsten Donovan)

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