Did Nationwide trade whilst aware of being insolvent?
3 May 2008
In January 2007 Nationwide stopped serving free meals on their local flights, but they never quite made the transition to low-cost carrier in the minds of the South African public. Not that their flight prices weren't low - in fact they were by some distance the cheapest airline in South Africa in 2007 - rather what I mean is that they never advertised themselves as a low cost carrier in the same brazen manner that Kulula, Mango and 1time airline do. The fact that they retained their full service status on their long haul flights between London and Johannesburg and Livingstone and Johannesburg, must have made it harder to advertise the fact that they were low cost inside South Africa (it's difficult to be half-pregnant).
Airlines are more vulnerable than we think, and being grounded hit Nationwide hard financially (which is why I repeatedly advised that they should release their financial statements, before anybody buys tickets with them). With their application for liquidation we can see why Nationwide never released their financials:
assets of R48m versus liabilities of R218m
This kind of balance sheet doesn't appear overnight, and I believe that they must have been trading whilst insolvent for some time. The question is when did they become aware that they were insolvent (I would like to think that immediately on becoming aware of their insolvency the directors stopped accepting people's money).
The solution to preventing this happening again is simple - airlines should be forced to publish the value of their assets and liabilities on a monthly basis (even unlisted companies, like Nationwide).