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Comair nosedive was written on the wall

IN a note yesterday, BRPs advised creditors that it was no longer useful to save Comair. Image, Simphiwe Mbokazi.

IN a note yesterday, BRPs advised creditors that it was no longer useful to save Comair. Image, Simphiwe Mbokazi.

Published Jun 10, 2022

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COMAIR’S liquidation was written on the wall due to a series of bad decisions and mishaps, aviation analyst Phuthego Mojapele said yesterday.

This as the business rescue practitioners (BRP) of the battling firm, which operates British Airways and kalula.com flights, yesterday lodged a court application to change the status to liquidation proceedings because additional funding could not be secured to save the ailing airline.

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In a note yesterday, BRPs advised creditors that it was no longer useful to save Comair.

Comair has been flying in South Africa since 1946 and has been in business rescue for the past two years.

Mojapele outlined the nosedive that led to the liquidation.

- When Comair committed to buying eight of the ill-fated 7 Max Boeing 737 aircraft, which were subsequently grounded;

– When it offered 30 percent price cuts it could not afford.

– Having a management that had no clue about the capital needs of an airline, team which depleted its reserves;

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– Rapidly increasing fuel prices, which provided the coup de grace to a company already in business rescue after failing to secure the $45 million (R697m) in deposits for eight of the planes;

– A recent setback was a five-day suspension of Comair's flights by regulator the SA Civil Aviation Authority in March after what it called a series of safety incidents including issues with the landing gear indicator on one of the flights.

Mojapele said, “It was wrong to use the last of its money to upgrade the fleet with those Boeing 737. That was a lot of money invested, and when Erik Venter left, they brought in Wrenelle Stander. They tried to work some solutions like selling the slow lounge for VIPs. But it was not enough, a drop in the ocean.”

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He pointed out that the R1 million a month in fees, which was paid for the Business Rescue Process started in 2020 had also contributed in draining its resources.

Airlink CEO and managing director, Rodger Foster, said: “The Comair situation is extremely sad, and I empathise with all its employees who now face renewed and heightened uncertainty. As we saw from other recent airline failures, the local aviation industry was already distressed pre-Covid, and today it faces new threats and challenges, not least of which are the inflationary costs being driven by the Russia-Ukraine war.

“Although Comair’s market share was substantial, at about 40 percent, the remaining local airlines will quickly fill this market gap. Comair was a formidable competitor and I am certain many of its employees will find new homes in the other carriers as they in turn expand. In the meantime, Airlink is supporting approximately 25 000 affected holders of tickets for Comair’s British Airways flights and will be helping them reach their destinations at no additional charge,” Foster said.

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Aaron Munetsi, the CEO of the Airlines Association of Southern Africa (Aasa), said, “Aasa notes with sadness the Comair liquidation announcement. Our thoughts are with all of the airline's staff and customers. At the same time, it should be noted that this takes place against a domestic and regional market which is making a robust recovery and characterised by healthy competition.

“By the end of May, the southern African market had recovered to 27.7 percent below 2019 capacity levels. At the same time last year we were still 50.4 percent below pre-pandemic levels,” said Munetsi.

In a brief statement on social media platforms last week, Comair, which operates British Airways and kulula.com, advised the public that its flights had been voluntarily suspended from June 1 pending securing funding to resume operations.

The National Union of Metalworkers of South Africa (Numsa) said it was deeply concerned for the troubled airline company, Comair, and its workers.

This was after Numsa’s meeting with the management team of Comair, including the CEO, Glenn Orsmond, and the company’s business rescue practitioner, Richard Ferguson earlier this week.

Numsa said it is deeply concerned about the state of the company and in particular, what this means for workers and their families.

“At least 1 200 jobs are on the line if this airline collapses. We maintain that this situation is caused by mismanagement at the highest level. Both Glenn Orsmond and Ferguson must take full responsibility for failing to turn the airline around. The airline has been under business rescue for possibly the longest time in South African history but Richard Ferguson failed to implement a strategy to keep the business viable,” Numsa further stated.

Numsa said it would be making an application to the Department of Employment and Labour for employees to be placed on the Training Lay-off Scheme.

“That way whilst the airline is not operating, workers can at least earn some kind of salary while training. At the same time, every effort must be made to find an investor for the airline in order to prevent liquidation,” Numsa further said.

Ferguson, says with its two airline brands, market share, modern aircraft fleet, experienced employees, sales and distributions channels Comair was an inherently viable business.

“Unfortunately, though, despite their best efforts the BRPs had been unable to secure the capital required for the airline to recommence operations. We did our utmost to secure the funding, but when we were unable to do so had no option to lodge the application. It is an extremely sad day for the company, its employees, its customers and South African aviation,” he further said.

After entering business rescue, Comair was able to start flying again when the Comair Rescue Consortium (CRC) invested R500m for a 99 percent share of the equity in the company at the time.

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