Comair to halve fleet and cut staff so it can resume flying
The retrenchment process that started before the company went into business rescue is to continue
Comair, which is is in business rescue, intends to halve its fleet of aircraft and reduce staff as part of efforts to save the company, the business rescue practitioners said on Friday.
The company, which operates Kulula.com and British Airways (BA) flights in SA, commenced voluntary business rescue proceedings on May 5 after all flights in SA were grounded due to the coronavirus pandemic.
Comair’s shares were suspended on the JSE but its administrators said in a Sens announcement on Friday that key elements of its business rescue plan include cutting its operational fleet in half and renegotiating and/or refinancing its aircraft finance and lease agreements.
The retrenchment process that started before the company went into business rescue will continue.
In terms of the Companies Act, a business rescue plan must be published within 25 business days of the date on which the practitioners were appointed. Longer time may be allowed if agreed to by the holders of a majority of the creditors’ voting interests.
Comair could also issue shares to investors in a recapitalisation, it said, warning that current shareholders could be “substantially diluted”.
The company has a fleet of about 27 Boeing planes. It intends to keep 13 737-800s and three 737-400s, it said earlier this week.
The practitioners have also asked creditors for a short extension for the publication of their plan. It was supposed to be published on June 9 but the practitioners, Shaun Collyer and Richard Ferguson, have asked for this to be extended until June 23.
Collyer and Ferguson justify their call for an extension on the grounds that Comair is still in the process of finalising its financial statements for April and that this information is required for reconciling creditors’ claims with the company’s records.
Another reason is that Comair is awaiting the independent calculation of the liquidation dividend creditors would receive if the company were to go into liquidation. This calculation must be included in the business rescue plan.
Finally, the practitioners said they would like to consult further with affected parties. They are, however, confident that Comair will fly again.
“As we’ve said repeatedly, our aim is to return Comair to the skies by November for the benefit of everyone,” they said on Friday. “We believe we remain on track to do this but need a little more time to complete a suitably comprehensive and sustainable plan.”
Creditors have until 5pm on June 8 to raise any written objections to the extension.
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