JOHANNESBURG - Comair, which operates the British Airways franchise in South Africa and budget airline Kulula.com, will be approaching lenders for additional funding of more than R1billion required for it to fly again following a successful adoption of the business rescue plan.
The vast majority of Comair creditors and shareholders on Friday voted to adopt the business rescue plan following a 1-month extension for its publication to negotiate post-commencement finance from potential investors.
Comair said the funding of R1.4bn would comprise R600 million in new debt while the remaining R800m would be deferred debt, with capital payments deferred for a year and interest for six months.
It said a number of former board members and executives would invest fresh equity of R500m in return for a 99 percent shareholding once the suspensive conditions have been met.
At least R100m of this would be paid in two equal tranches as secured post-commencement finance during the next two months.
The struggling airline said up to 15 percent of this would be allocated to a suitable BBBEEE partner within 12 months.
Comair would be de-listed from the JSE and a new board constituted.
One of the business rescue practitioners, Richard Ferguson, said a number of suspensive conditions in the rescue plan must still be met.
Ferguson said if this did not happen, then the company would be wound down in a structured manner to achieve the best return for creditors.
“That doesn’t diminish what an important moment this is for Comair, its employees, the investors and the South African flying public,” Ferguson said.
“After nearly six months of intensive work and negotiation in a fraught economic environment, it is an exceptionally positive result.”
Comair went into business rescue in March after a countrywide lockdown was imposed to curb the spread of Covid-19.
Comair’s turnaround plan will focus on reducing operating costs and growing ancillary revenue.
This will see the current workforce reduced from about 2200 employees to 1800 through voluntary retrenchment and early retirement programmes, as well as the Section 189 retrenchment process.
Comair chief executive Wrenelle Stander said the extraordinary circumstances of the lockdown meant the company was unable to earn any revenue.
“When the lockdown happened, business rescue became the only responsible course of action,” Stander said.
“Had we not made that tough decision Comair would not have flown again.”
It is intended that the fleet be restored to 25 aircraft, including two Boeing Max aircraft.
Comair said the aircraft would gradually return to service from December with a seven-month ramp-up period until June 2021.
The business rescue process is expected to be concluded by March 31, 2021, after which Comair will continue to operate as a sustainable business.