the g spot
Comair: Rising from the ashes
It may have disappeared from the JSE (for now), but Comair this week returned to active service, as kulula flights resumed on Tuesday after the company was placed in business rescue earlier this year. Comair’s new backers — most of them private individuals — agreed to pump in R500m in return for a 99% share in the business. But the airline, which until 2020 had had an unbroken 74 years of profitability, will still need an extra R1.4bn from lenders. Given a resurgence in the number of Covid cases, it will be a while before business returns to pre-pandemic levels. We spoke to Glenn Orsmond, who was named CEO this week on the departure of Wrenelle Stander.
Has it been a long slog?
GO: It has been tough. [We] stopped flying at the end of March and the business rescue process started on May 5, so we haven’t been flying for eight months.
We decided not to start with a big bang but rather ramp up to steady growth. Our next stage is BA flights, which we launch on December 9. And then we’ll just keep adding aircraft. We’ve started with six, on the 9th we will add six BA aircraft and we think that by March we should have [all] 20 aircraft operating.
Are you going back to the same routes?
GO: In terms of routes it’s the same timetable, but we’re starting domestic [first] and then regional later.
What kind of aircraft loads are you hoping to carry?
GO: What happens in the market is that the level of demand is more linked to price than GDP growth, for example. And with the lockdown, Airlink have come in a lot more aggressively with cheap seats, which is stimulating demand. So with the rand being quite strong and oil prices low, airlines are able to trade quite profitably.
What actually happened to Comair?
GO: An organisation just becomes fat and lazy. That’s the harsh reality.
Are you going to be profitable from the get-go?
GO: We’d lost our way with costs. But we’ve been able to renegotiate leases and system costs as well as IT costs and we have emerged with a much lower cost base than pre-lockdown.
How much in costs have you cut from the business?
GO: We’ve achieved R600m in reductions. Staff numbers had been falling through attrition and voluntary severance packages, and the final forced retrenchment will be between 50 and 100 staff. We’ll end up with about 1,700 staff.
What about the money that SAA owed you?
GO: SAA owes us R700m, but creditors get a fixed payment so we’d expect R20m. But we are not reliant on any of that money coming in.
Going back to my earlier question, how full are your aircraft likely to be?
GO: We had to present [a plan] to the new investors and to the business rescue practitioners, and they had to believe that the rescue plan was viable and achievable. We’ve obviously run load factors and we are fairly confident on where we are now.
Are people actually booking?
GO: Yes. We’ve got full flights. The holiday market is not the same as last year, however — it’s moved a bit later. Historically, December would always have a few waves — the 1st, 16th and 20th, but with schools closing and opening later, the whole holiday period is going to move up by about 10 days.
What about the dearth of overseas travellers?
GO: What might happen is there is some sort of trade — so they aren’t coming in but SA guys aren’t going out, so that market stays home.
Our major routes would have been regional routes like Mauritius and those we are only introducing later. It will be down, but there are a lot of international airlines still flying in — Virgin, BA, Lufthansa, Etihad, Emirates.
What about your backers — who are they?
GO: The investor consortium is a group of entrepreneurs with proven track records and there is [aviation] experience in the management team.
It includes previous Comair executives like Martin Moritz, one of the founders of Comair and Rodney Sacks, who was also on the Comair board.
Rodney is a dollar billionaire — he owns Monster Beverage Corp. He’s a South African, along with his partner Hilton Schlosberg.
Steven Herring is also South African — he chairs JSE-listed property group Heriot. And then there’s Luthier Capital. So a bunch of strong individuals.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.