Velvet stays grounded pending court hearing
Category Property News
VELVET Sky would not resume flying today as the company had not reached a settlement with BP over the R28,7m of its outstanding fuel bill, according to Gary Webb, the carrier’s chief operating officer.
The airline will go to court tomorrow to defend itself against a provisional liquidation BP brought against it, Mr Webb said.
BP filed the motion on February 17 after Velvet failed to pay its fuel account, which had gone unpaid since October, BP spokeswoman Glenda Zvenyika said yesterday.
Last week, Velvet’s executive chairman, Stephen Nthite, moved to suspend the airline’s service until yesterday to give the company a chance to restructure its board and reach agreement with creditors.
Mr Webb said Velvet responded to BP’s motion yesterday and would return to court tomorrow “when the court produces its finding”.
“We were supposed to start flying again tomorrow (today) but legal has advised us to sit tight until those findings (are made),” Mr Webb said. The suspension of service left scores of passengers stranded.
But Mr Webb said passengers whose flights had been cancelled would be reimbursed — a process he claimed had already started.
Velvet director Ahmed Amod said yesterday discussions were under way on the restructuring of the board and its funding options.
The mood created by Velvet’s woes appeared to have spooked would-be newcomers with the South African National Taxi Council (Santaco) saying it would no longer offer its low-cost service next month, delaying the start date for the second time, after its November start date was postponed.
“I don’t see us doing it in April,” Nkululeko Buthelezi, Santaco’s business development officer, said in an interview yesterday.
“We are cautious regarding the viability of the airline in terms of the finances. I am sure you are aware of Velvet’s problems, so we are also being careful about our planning; we need to be properly capitalised.”
Licensing and funding were the two main issues stopping the association from proceeding with its plans to start an airline service, Mr Buthelezi said.
“We are also discussing finances to make sure that we have sufficient capital to support the business going forward as we grow the new routes. We are estimating we will need R100m to run at least for a good 12 months to 18 months depending on demand.”
Velvet Sky’s majority shareholder is Excalibur Aerospace, an aviation industry service provider owned by Excalibur Private Equity, which claims to be black-owned. Excalibur Aerospace acquired its 74% stake in Velvet Sky from founding company Macdonald Holdings for an undisclosed sum, within just three months of the airline’s launch.
Last month Velvet purchased two DC9 aircraft, one of which had belonged to Tokyo Sexwale’s family. The aim was to establish a luxury VIP charter division
Author: Business Day
