'Reasonable prospects' that Comair can be saved, say rescue practitioners
Comair's business rescue practitioners believe there are reasonable prospects for the airline to be saved.
One of the practitioners, Shaun Collyer, said this on Monday as he and fellow practitioner Richard Ferguson held the first formal meetings with creditors and employees after the company entered business rescue on May 5.
Collyer said he based his statement on several facts:
- Comair's assets exceed its liabilities;
- the airline is a critical infrastructure asset for SA; and
- it is competitively well-placed, enjoying a 39% market share for domestic travel.
The company also enjoys significant goodwill and a long-standing reputation in the travel community and with the public and customers, he added.
He said Comair was not factually insolvent as it has R7.42bn in assets on its balance sheet, compared to liabilities of R5.48bn. Instead it was considered financially distressed, because there was insufficient cash to pay ongoing costs and obligations and — with flights grounded for an uncertain period — no opportunity to generate revenue.
In the meeting with creditors, Collyer said Comair had reported a half-year loss of R564m for the first quarter of 2020. This included R790m that was unrecoverable after SAA entered business rescue in early December 2019. The money was for outstanding payments still owed on a R1.1bn settlement of a Competition Commission complaint.
Collyer said Comair had been unable to operate from March 26 as a result of the lockdown.
“When the government subsequently announced that the lockdown would be lifted in phases, and domestic flights would resume only in phase 2, Comair had no choice but to file for business rescue,” he said.
The next step in the business rescue process is the formation of a creditors’ committee and an employee representatives' committee. A business rescue plan is expected to be published on June 9 and a vote to approve the final plan has been set for June 24.