Also COMAIR under Business Rescue

Listed airline company, Comair, today (May 5) announced that the group would enter business rescue to “safeguard the interests of the company and its stakeholders” after the COVID-19 crisis disrupted the implementation of a turnaround plan.

Comair was granted approval to suspend the trading of its shares on the JSE with immediate effect, with Comair CEO, Wrenelle Stander, saying the company faced an “unprecedented situation” following the COVID-19 lockdown“While we had started making good progress to fix the financial situation six months ago, the crisis has meant we have not been able to implement it as we intended.

“While we had started making good progress to fix the financial situation six months ago, the crisis has meant we have not been able to implement it as we intended.

“We completely understand and support the government’s reasons for implementing the lockdown, however, as a result, we have not been able to operate any flights. Now that the phased lockdown has been extended, the grounding is likely to endure until October or even November. These extraordinary circumstances have completely eroded our revenue base while we are still obliged to meet fixed overhead costs. The only responsible decision is to apply for business rescue.”

Stander pointed out that Comair remained solvent and “an important contributor to the South African economy”.

“This is a necessary process to ensure a focused restructuring of the company takes place as quickly as possible so we can take to the skies again as a sustainable business and play our part in the country’s airline industry,” she added.

BRPs begin the business rescue process

Shaun Collyer and Richard Ferguson have been appointed as the joint business rescue practitioners, with effect from today (May 5).

The business rescue process will build on the turnaround plan that Comair management was already implementing. It aims to preserve cash, cut costs, dispose of non-performing assets and strengthen the balance sheet. The Section 189A process, which was part of this plan and which began on March 23, will continue.

Stander said Comair would resume its operations in accordance with government directives and would continue to engage with government to accelerate the opening of the airline industry.

In its H1, FY20 results, Comair reported a half-year loss of R564 million (€28.25m). Although revenue grew by 3%, this was not enough to offset cost increases of 14% resulting from significantly higher fleet and maintenance costs.

The R790 million (€39.56m) SAA owed Comair as a consequence of anti-competitive practices was accounted for in the H1 2020 financials.