Following on from our report last week that South African firm 1Time Holdings had declared its two subsidiaries, LCC 1Time (T6) and maintenance arm JetWorx, to be in financial distress, the South African Companies Intellectual Properties Commission (CIPC), has approved a Nominated Business Practitioner (NBP) to oversee 1Time's business plan reform process over the coming next three months - Gerhard Holtzhauzen, CEO
of Strategic Turnaround Solutions, has been appointed. Holtzhauzen was positive about the company's potential: "We have a head-start because a turnaround strategy for 1time has been contemplated by a proactive management team."
During "Business Rescue", a distressed company is given a 3 month long protection period from creditors while the business is (hopefully) turned around - more or less equivalent to filing Chapter 11 in the US. The company will continue to operate normally though there will obviously be a review of the airline's operations and current routes in order to cut away the deadwood and retain the most profitable ones.
Meanwhile, the news given some breathing room to both companies, in particular to Jetworx whose trade union Solidarity, was last week warned the division faced job cuts of up to 25%. The appointment of NBP Gerhard Holtzhauzen has meant the job cuts will be deferred, though not necessarily abandoned.
"During yesterday’s consultation, we were informed that the process had been put off for the time being owing to the appointment of a business rescue specialist. The specialist must draw up a refinancing and restructuring plan for the company. The company will also be given the opportunity to develop and to implement a business rescue plan and to carry on its operations at the same time. 1time Holdings, Jetworx and the business rescue specialist will be requested in a letter to involve Solidarity in the process.” Solidarity spokesperson Marius Croucamp said.
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| Blacky Komani - 1Time CEO (CP) |
In addition, unprofitable routes may also go, with the first rumoured to be 1Time's service to Mombasa, Kenya, though the reason for dropping the route may have more to do with soaring costs and charges in Kenya, than 1Times own internal woes.
"If this is true [1Time's withdrawal from Mombasa], other airlines might follow if charges keep going up. Authorities at times in the past just raised fees with little notice and until fares are adjusted the carriers have to absorb that added cost. Proposals in the new VAT bill spell doom for aviation in Kenya, like moving from an exempt status to a double digit tax figure. Those who drafted the bill are either totally uninformed or else agents of doom for the airline industry in Kenya."
The next three months are going to be most interesting for 1Time and Jetworx as various painful measures are implemented in order to see the two companies remain afloat.
►[UPDATE 29 AUGUST 2012] 1Time officially cuts Mombasa route as of 17 September 2012.
►[UPDATE 29 AUGUST 2012] 1Time officially cuts Mombasa route as of 17 September 2012.