Comair goes into business rescue, doesn't expect to fly until October or November
Comair, which operates Kulula and British Airways, on Tuesday announced it would go into business rescue to “safeguard” the interests of the company and its stakeholders after the Covid-19 crisis disrupted the implementation of a turnaround plan.
It does not expect to take to the skies again until October or November.
Comair chief executive Wrenelle Stander said the company, which reported a half-year loss of R564m, faced an unprecedented situation following the lockdown.
“While we had started making good progress to fix the financial situation six months ago, the crisis has meant we have not been able to implement it as we intended.
“We completely understand and support the government’s reasons for implementing the lockdown. However, as a result we have not been able to operate any flights. Now that the phased lockdown has been extended, the grounding is likely to endure until October or even November.
“These extraordinary circumstances have completely eroded our revenue base while we are still obliged to meet fixed overhead costs. The only responsible decision is to apply for business rescue,” Stander said.
The company said it was, in terms of the lockdown regulations, required to stop flying on March 26 and has not operated any passenger services since.
“Comair remains solvent and an important contributor to the South African economy. This is a necessary process to ensure a focused restructuring of the company takes place as quickly as possible so we can take to the skies again as a sustainable business and play our part in the county’s airline industry,” said Stander.
Shaun Collyer and Richard Ferguson have been appointed as the joint business rescue practitioners with effect from May 5.
Comair was granted approval to suspend the trading of its shares on the Johannesburg Stock Exchange (JSE) with immediate effect.
The business rescue practitioners will provide shareholders and all other stakeholders with updates throughout the process, the company said.
The business rescue process will build on the turnaround plan that Comair management was already implementing, and aims to preserve cash, cuts costs, dispose of non-performing assets and strengthen the balance sheet, said the airline.
Comair said the business rescue practitioners would work with the management team and the board towards it resuming operations in accordance with all regulatory requirements, including the health protocols to prevent the spread of Covid-19.
Stander said Comair would resume its operations in accordance with government directives and will continue to engage with government to accelerate the opening of the airline industry.
“The health and welfare of our customers, crew and the public is the overriding priority, and we will only operate when we are sure we can do so safely,” he said.
Customers with existing bookings will be able to rebook flights within 12 months of their departure date. There will be no charge for any changes made before November 1 2020, the company announced.
“Through this process we intend to right-size our operations to be more efficient, agile and customer-centric. This includes, but is not limited to, reconfiguring our network and fleet mix, reviewing portfolios and joint ventures, increased digitisation of the business and new product development and delivery,” said Stander.
“We are confident that with the work we’ve already done and the support of our stakeholders, we will get through this process and will be a more sustainable business, better positioned to continue serving the flying public and contributing to the South African economy.”
The business rescue practitioners will contact all stakeholders and suppliers to plan the way ahead in accordance with the processes set out in the Companies Act.