Comair warns on finances with South African flights months away
JOHANNESBURG - Comair Ltd. warned investors that the grounding of South African air travel has put its finances in a precarious position, with the carrier preparing for at least five more months before it can resume flights.
The owner of budget airline Kulula and the operator of local flights for British Airways had slumped to an operating loss of 562 million rand ($31 million) in the six months through December -- before the global coronavirus pandemic forced the grounding of almost all aircraft worldwide. South Africa imposed a strict lockdown in March and, while the government is slowly easing restrictions, a resumption of flights is unlikely before October, Comair said.
“The five-week lockdown has caused the situation to rapidly deteriorate to a point where the company finds itself in a very difficult financial position and shareholders are advised to exercise caution,” the Johannesburg-based carrier said in a statement on Thursday.
The stock slumped as much as 21%, and has lost more than 60% of its value in the year to date.
Comair’s crisis is being felt across South Africa’s aviation industry. FlySafair, which had been adding routes and frequencies before the Covid-19 outbreak, is pushing the government to waive fees during the shutdown to help preserve cash. State-owned South African Airways is in administration and SA Express is in provisional liquidation.
Globally, aviation giants including Air France-KLM and Deutsche Lufthansa AG are locked in negotiations with their governments about bailout deals. The International Air Transport Association is estimating $314 billion in lost ticket sales this year and 25 million job losses.
Comair is working to reduce costs and strengthen the balance sheet to ensure survival, including through job cuts and asset sales. The company is in talks with lenders about providing bridge financing, though negotiations are ongoing.