Edward West
30 April 2008
Johannesburg — NATIONWIDE CE and owner Vernon Bricknell threw in the towel with his beleaguered airline yesterday, ending a tough struggle for survival for the airline that started in November.
Nationwide was not strictly a low-cost carrier, such as Mango or 1time. It offered tickets on regional routes at the lower end of prices offered by its competitors South African Airways and Comair.
Its fleet comprised 10 Boeing 737-200 and three Boeing 727-200 aircraft. It also leased one Boeing 767-300 ER and two Boeing 737-500 passenger aircraft.
Nationwide's collapse may not be part of an industry trend, but it is not alone. Aviation analyst Linden Birns pointed out that six airlines have closed in the US this month already, all citing rising fuel costs as one of the reasons. In the US, jet fuel prices have risen 83,2% in the past 12 months. Nevertheless, Birns said the closure of Nationwide came as a surprise.
"Everybody was anticipating the BEE transaction, which by all accounts fell apart on the weekend," Birns said.
African General Equity Group announced a partnership agreement to buy 51% of privately held Nationwide in February . Part of the agreement had been to help the airline with its funding.
Nationwide's attorney Haroon Laher said the airline's troubles began on November 7, when the engine of a Boeing 737-200 fell off on takeoff from Cape Town International. The aircraft had been audited by airline maintenance authorities from September 3-5.
Because of the subsequent grounding, the airline made a loss of R2,8m in November. During December, as a result of the temporary suspension of all flights and negative publicity, total revenue came to only R27,3m, while the projected turnover, had it been a normal month , would have been about R114m.
A due diligence was concluded on Nationwide last week, which had been a precondition for the empowerment deal to proceed.
By the end of last month, Bricknell had secured R10m bridging loan finance for the airline, pending the conclusion of the deal.
However, the airline ran out of cash ahead of a scheduled meeting with the Industrial Development Corporation next month, to secure additional funding.
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