The recent High Court judgment ordering South African Airways (SAA) to pay Nationwide Airlines more than R104.6-million in damages for uncompetitive practices means the national carrier now has no wriggling room left, Alf Lees, the DA's deputy shadow minister of finance, said on Thursday.

He pointed out that the remaining R99-million SAA can borrow against its R15-billion government guarantee is not enough to meet the Nationwide judgment that is likely to amount to some R140-million once interest charges are added.

"R140-million added to a leaked first quarter loss of allegedly R1.3-billion means that SAA will in all likelihood start defaulting on creditor payments," cautioned Lees. In his view, it is a further sign that SAA should be placed under business rescue.

Nationwide had to stop operations in April 2008 and is currently in liquidation. The case has been dragging on since 2001 and Nationwide's original claim against SAA was R171.5m in damages, plus interest calculated from 2010.

The High Court agreed with the Competition Tribunal that SAA's behaviour from 2001 to 2005 was the biggest contributing factor to Nationwide’s loss in passenger volumes. The tribunal found that most of SAA's abuse was due to certain practices relating to the travel agent sector.

"This is certain to plunge SAA into further financial disarray, necessitating the need for the airline to be placed under business rescue," said Lees.

"SAA continues to cost the country and its citizens. The High Court judgment is just another nail in the beleaguered airline's financial coffin."

Lees pointed out that the latest judgment against SAA has set a precedent and should be of concern to National Treasury and Finance Minister Pravin Gordhan as Comair is seeking damages from SAA on similar grounds. Comair's claim is for more than R1-billion in damages.

"The Nationwide liquidators will be forced to file for the liquidation of SAA should the inevitable happen and SAA is unable to honour the R140-million compounded by this court order," said Lees. In his view, it can no longer be denied that SAA is bankrupt and "continues to trade recklessly".

"The directors, including President Jacob Zuma’s very close friend, SAA chair Dudu Myeni, are undoubtedly in breach of the Companies Act and must be held personally liable for the losses incurred by SAA. We estimate it now amounts to some R11-billion for the 2014/2015 and 2015/2016 financial years as well as for the first quarter of 2016/17," said Lees.

He said he finds it "incomprehensible that Gordhan continues to prevent SAA from being placed under business rescue so that the board can be replaced with what Lees calls "competent and dedicated people".

Lees emphasised that he has written to Yunus Carrim, chair of the Standing Committee on Finance and to Gordhan about SAA, but neither have acknowledged his letters. In the letters Lees asked the finance committee to obtain a legal opinion about a request for an extension to the deadline for the SAA's annual financial statements to be submitted. Lees also asked Gordhan to ensure SAA's 2014/2015 annual financial results are submitted immediately.

"Instead of replying to my request, the finance committee chair has published a draft 3rd and 4th quarter programme for the finance committee that makes absolutely no provision for the committee to conduct the urgently required oversight over SAA, let alone deal with the request for an extension of time for the SAA 2014/15 financial statements," said Lees.

"The DA will consequently follow up on these requests in an effort to ensure that SAA is competitive, privatised, self-reliant and well-governed."

In July Gordhan said SAA requires a whole new board and SAA an experienced management team. He said a turnaround strategy should be implemented for the airline to be able to continue and undertook to continue to find answers to the airline's challenges.

In reaction to the high court order, Vernon Bricknell former owner and MD of Nationwide Airlines, told Fin24 that, in his view, SAA needs a lot more than just a change of board. "It must start making a profit instead of just killing their competition," said Bricknell.

"Hopefully the result of our case and Comair's upcoming one (will make) SAA start to behave itself."

SAA still has about 14 days to file a notice of appeal in the Nationwide case. SAA indicated on Wednesday that it is still considering the court order and possible legal options if there are grounds to pursue such options.

Gordhan requested extensions of the deadline for tabling of SAA's annual report for 2014/2015 on 15 February, 15 March, 29 April and yet again on 7 July - this time to 15 September 2016.

SAA has received a number of government bailouts worth at least R14.4-billion as part of its turnaround strategy, but Gordhan warned in January the carrier cannot become a liability on the fiscus.