If latest business rescue plan is approved, Comair hopes to start flying in December
The future of Comair should be known by September 18 when creditors and shareholders are to make their decision on whether to adopt the business rescue plan tabled on Wednesday.
In a statement, business rescue practitioners at Comair — which operates kulula.com and British Airways in SA — said depending on this decision, its flights could be operational in December.
“The publication of the plan follows negotiations with a preferred investor which will see a fresh equity injection of R500m in return for a 99% shareholding. Up to 15% of this shareholding will be allocated to a suitable BBBEE partner within 12 months,” said the business rescue practitioners.
“The first R100m will be paid in two equal tranches in September and October as secured post-commencement finance. Additional funding from lenders of R1.4bn is required to successfully implement the adopted plan. This will comprise R600m in net new debt.
“Existing debt will be deferred to provide the remaining R800m, with capital payments deferred for 12 months and interest for six months. Comair will be delisted from the JSE and a new board constituted in due course,” they added.
This new plan, however, would still include retrenchments which were proposed before the business rescue.
The staff complement at the airline would be cut from 2,200 to about 1,800. Staff would be offered voluntary retrenchment or early retirement packages.
Comair’s fleet would comprise of 20 aircraft of which 17 would be next-generation Boeing 737-800s and the remaining three Boeing 737-400s. This fleet mix increases the proportion of owned aircraft, which limits exposure to foreign currency risk, the business rescue practitioners said.
The airline seeks to continue in its partnerships with British Airways, Discovery Vitality and Boeing.
“In the event that the suspensive conditions in the plan are not met, the plan details how the company will be wound down in a structured manner as this will achieve a better return for creditors than a liquidation,” the business rescue practitioners said.
If the business rescue plan is approved, the implementation process would be concluded by March 31 2021.
One of the business rescue practitioners, Richard Ferguson, explained that the situation which unfolded at Comair was not unique.
“It is important to understand that what happened to Comair was the result of an ecosystem problem that has seen some 600 airlines about the world cease to operate. It was not something that was business-specific. Comair is a national asset. Getting it back in the air will save 1,800 jobs, provide the flying public with more choice and competitive fares, strengthen the aviation sector and contribute to the broader SA economy,” said Ferguson.