Special Tribunal Orders Flyfofa Airways to Repay Profits From Unlawful R85m SAA Lease Extension
The Special Tribunal has set aside South African Airways’ (SAA) decision to extend its dry-lease agreement with Flyfofa Airways (Pty) Ltd for a Boeing 737-300 freighter, ordering the recovery of all profits made from the R85.3 million contract.
The judgment follows an intensive investigation by the Special Investigating Unit (SIU), which revealed that SAA’s Board extended the lease for 36 months from 1 July 2019 without any procurement process or approval for deviation from the National Treasury.
The Tribunal found the decision violated Section 217(1) of the Constitution, which requires public procurement to be fair, equitable, transparent, competitive, and cost-effective.
The SIU’s probe exposed significant irregularities dating back to September 2015, when the SAA Board initially approved a deviation from standard aircraft-procurement processes.
Despite an internal assessment recording Flyfofa’s financial position as “high risk” due to a lack of audited statements, a 0.1 solvency ratio, and consecutive financial losses, SAA entered a series of short-term wet-leases in 2016.
This culminated in a three-year dry-lease agreement later that year.
When the contract was extended in 2019 for another 36 months at a cost of R85,340,863, the Flyfofa aircraft (registration ZS-TGG) was actually grounded.
SAA nevertheless continued to make payments to the company during the grounding period, effectively ceding its domestic overnight freighter operations to Flyfofa.
The Tribunal declared the 2019 extension unlawful and set it aside on the grounds of legality.
To facilitate the financial recovery, the Tribunal ordered Flyfofa to provide the SIU’s attorneys with a comprehensive account of all payments received and actual costs incurred within 30 days of 11 September 2026.
This accounting must explicitly detail the period during which the aircraft was grounded and any substitute performance provided.
Flyfofa must repay any profits or unjustified enrichment to the SIU within 14 days of the accounting, alongside an 11% per annum interest rate calculated from the date of the order.
While individual board members were not cited as respondents, Judge Fortuin heavily criticised the conduct of the SAA Board, stating that such actions carry a direct cost to the public.
The Tribunal ordered the Registrar to forward the judgment to the Minister responsible for SAA, as well as SAA’s current directors and Board chairperson.
The Minister has been directed to evaluate whether current directors involved in the 2019 decision remain suitable for their roles and must file a progress report with the Tribunal within 90 days.
Furthermore, the Tribunal highlighted several legal mechanisms to hold individual officials personally accountable.
These include:Public Finance Management Act (PFMA), Companies Act and Criminal Referrals.
The investigation was authorised under Proclamation R2 of 2020 signed by President Cyril Ramaphosa, marking another step in the SIU’s ongoing efforts to enforce consequence management and recover losses suffered by state institutions.
