South Africa's Nationwide Airlines suspends all flights due to high fuel costs

2 May, 2008:

Nationwide Airlines, the budget carrier of South Africa, has suspended all its flights on account of the financial crisis arising from rising costs of fuel.

In a statement, Nationwide Airlines – which operates about 50 domestic and international flights a day – said that it had not been able to recover after its entire fleet was briefly grounded by the Civil Aviation Authority over safety concerns in November 2007.

The action by the Civil Aviation Authority had followed an investigation after an engine fell off one of Nationwide Airlines' planes shortly after takeoff from Cape Town's main airport.

Vernon Bricknell, chief executive of Nationwide Airlines, was quoted by the website guardian.co.uk as commenting on the suspension of flights: "Our cash flow has become critical and as a result have decided to voluntarily cease all flight operations until further notice. In December 2007 and January 2008, we had resumed operations and attained a gradual recovery of the business. However, in March and April 2008, we faced a 30% increase in fuel costs coupled with a decrease in passenger load factors."

Nationwide Airlines was operating flights four times a week from Gatwick to Johannesburg.

In South Africa's low-fare market, Nationwide Airlines, founded in 1991, competes with Kulula.com division of Comair Limited, 1Time Holdings Limited, and the Mango unit of the state-owned South African Airways Limited.

Mango, based in Johannesburg, will offer the stranded customers of Nationwide Airlines preferential fares, the website bloomberg.com quoted the company as saying in a statement.

According to the website, Comair, which is partly owned by British Airways Plc, rallied with 1Time in trading in Johannesburg after reports of the closure of Nationwide Airlines.

Comair's shares rose by 20 cents (or, by 9.5%) to 2.30 rand in Johannesburg, its biggest advance in almost three months. Shares of 1Time rose by 3 cents (or, 4.5%) to 70 cents.

Nationwide Airlines – which operates domestic routes in South Africa and operates a service to London's Gatwick airport with a fleet of 17 planes – flies over one million passengers a year, a top official of the carrier had said in an interview in November 2007.