Comair aims to resume flying in December, workforce to be reduced
Comair hopes to resume flying again in December if their business rescue plan, published on September 2, is accepted.
Creditors and shareholders now have until September 18 to consider and adopt the plan.
The company revealed in a statement that the publication of the plan follows negotiations with a preferred investor, which will see a fresh equity injection of R500-million in return for a 99 percent shareholding. Up to 15 percent of this shareholding will be allocated to a suitable BBBEE partner within 12 months.
It revealed that the first R100-million will be paid in two equal tranches in September and October as secured post-commencement finance. Additional funding from lenders of R1.4-billion is required in order to successfully implement the adopted plan. This will comprise R600-million in net new debt.
Existing debt will be deferred to provide the remaining R800-million, with capital payments deferred for 12 months and interest for six months. Comair will be de-listed from the JSE and a new board constituted in due course.
The turnaround plan is focused on rationalising operating costs and growing ancillary revenue.
They revealed that the workforce will be reduced from approximately 2 200 employees to 1 800 through a voluntary retrenchment and early retirement programmes, as well as the continuation of the Section 189 retrenchment process that the company commenced prior to business rescue. The fleet will comprise 20 aircraft of which 17 will be next-generation Boeing 737-800s and the remaining three Boeing 737-400s. This fleet mix increases the proportion of owned aircraft, which limits exposure to foreign currency risk.
The aircraft will gradually return to service from December with a seven-month ramp-up period until June 2021.
Other elements of the offer include maintaining the existing relationships with British Airways, Discovery Vitality and Boeing.
"In the event that the suspensive conditions in the plan are not met, the plan details how the company will be wound down in a structured manner as this will achieve a better return for creditors than liquidation," it revealed.
Richard Ferguson, one of the business rescue practitioners, says that if creditors approve the plan the business rescue process should be concluded by March 31, 2021, after which Comair will continue to operate as a sustainable business.
“It is important to understand that what happened to Comair was the result of an eco-system problem that has seen some 600 airlines around the world cease to operate. It was not something that was business-specific. Comair is a national asset. Getting it back in the air will save 1 800 jobs, provide the flying public with more choice and competitive fares, strengthen the aviation sector and contribute to the broader South African economy," he said.