Page 44 - World Airnews Magazine June 2020 Edition

AIRLINES

COMAIR ENTERS BUSINESS

RESCUE

“These extraordinary circumstances have The business rescue process will build
completely eroded our revenue base, while on Comair’s turnaround plan, to preserve
outh Africa’s Comair Group, which we are still obliged to meet fixed overhead cash, cuts costs, dispose of non-performing

Soperates LCC kulula.com and costs. The only responsible decision is to assets and strengthen the balance sheet.
franchise flights for British Airways, has apply for business rescue.” Comair said it is in constructive talks

entered business rescue after learning that Business rescue is a South African process, with a consortium of banks over bridg-

South African flight groundings may contin- similar to administration, where external ing finance and looking at various other

ue until November. “practitioners” are brought in to restructure equity options. The airline’s shares were
Privately owned Comair had been prof- a company. Shaun Collyer and Richard Fer- suspended following the business-rescue

itable every quarter for 73 consecutive guson have been appointed as Comair’s joint announcement.

years. However, the business reported a business rescue practitioners. Stander said Comair “remains solvent”
R564 million (US) $30.6 million loss for the Two other notable South African airlines but business rescue is “necessary” for a
six months ending Dec 31, 2019, after costs - South African Airways (SAA) and South quick and focused restructuring. The airline

rose 14% and revenues grew by only 3%. African Express (SAX) - are also in the midst still plans to resume operations once the

On March 23, Comair announced that it of business rescue. The South African gov- government lifts flying restrictions.

had initiated Section 189 redundancy pro- ernment plans to revive SAA in a new form, “Through this process we intend to right-

ceedings as part of a financial recovery plan. while state-owned SAX is being liquidated. size our operations to be more efficient,

With the onset of the COVID-19 crisis, Comair has historically been more stable. agile and customer-centric. This includes,

South Africa then mandated a halt to all The company went into decline after being but is not limited to, reconfiguring our

flights on March 26 and Comair has not op- hit by a series of exceptional items, including network and fleet mix, reviewing portfolios

erated any passenger services since then. the Boeing 737 MAX grounding, set-up costs and joint ventures, increased digitisation

The country is planning a phased relax- linked with a major maintenance transition of the business and new product develop-

ation of the flight ban, starting with restricted and South African Airways’ (SAA) entry into ment and delivery,” Stander said.

air travel at COVID-19 ‘Risk Level 3’ and then business rescue, which halted payments from Comair has already axed its planned R75

moving to allow full domestic air travel at a legal settlement between the two airlines. million ($3.9 million) acquisition of Star Air

‘Risk Level 2’ once the threat has diminished. Comair had already begun implementing a Maintenance and Star Air Cargo. It is also dis-
When ‘Risk Level 1’ is reached, regional and turnaround plan before COVID-19 took hold. posing of Course restaurant and closing urban

international flying will be permitted again. “While we had started making good prog- business-lounge brand “SLOW in the City.”

“Now that the phased lockdown has been ress to fix the financial situation six months Meanwhile, talks are underway with
extended, the grounding is likely to endure ago, the crisis has meant we have not been Boeing to cancel the airline’s 737 MAX 8

until October or even November,” Comair able to implement it as we intended,” order and secure compensation related to
CEO Wrenelle Stander said. Stander said. the type’s ongoing grounding. Q
World Airnews | June 2020
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