Comair eyes taking off again in December
Struggling airline plans to cut jobs and delist from the JSE as part of proposed business rescue plan
In what could mark the return of an icon of the SA aviation industry, Comair aims to resume flights in December, cut almost a fifth of its workforce and delist from the JSE as part of a proposed business rescue plan.
Comair filed for the form of bankruptcy protection that allowed it to delay creditors’ claims against it or its assets in May after the Covid-19 pandemic coincided with a weakening operational performance, dealing a mortal blow to the company that was on course to break its more than seven-decade record of annual profits.
Under the plan published on Wednesday, a group of investors that include former directors, are to inject R500m into the group in return for virtually all of the company, which was worth R2.4bn when trading its shares were suspended on the JSE in May.
Additional funding of R1.4bn will be required from lenders to carry out the plan, which includes cutting 400 jobs, taking the airline private and reconstituting its board of directors, business rescue practitioners said. The funding will comprise R600m in new debt while the existing debt will be deferred to provide the remaining R800m.
“It is important to understand that what happened to Comair was the result of an ecosystem problem that has seen some 600 airlines around the world cease to operate,” Richard Ferguson, one of the business rescue practitioners, said in a statement.
“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.”
If the plan is adopted, aircraft will gradually return to service from December with a seven-month ramp-up period until June 2021.
The consortium includes former Comair directors Martin Moritz, Pieter van Hoven and Rodney Sacks, and an investment vehicle, Luthier Capital. Former co-CEO Glenn Orsmond and former finance director Kirsten King are also on board.
On top of the offer, they have secured an advance worth R100m from financial services group Discovery, which will buy services under its Vitality programme that rewards insurance clients for making healthy lifestyle choices.
“We intend to retain the aircraft fleet and to grow the business domestically and regionally while minimising staff retrenchments and ruthlessly cutting overheads and improving efficiencies,” the consortium said in the statement.
The fleet will comprise 20 aircraft of which 17 will be next-generation Boeing 737-800s and the remaining three Boeing 737-400s. The fleet mix increases the proportion of owned aircraft, which limits exposure to foreign currency risk.
Other elements of the offer include maintaining the existing relationships with British Airways, which has granted Comair licence to run its flights in SA, and Boeing.
If the plan is not approved, Comair will be wound down in a structured manner for a better return to creditors than a liquidation.
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