Comair’s Business Rescue Plan Approved With December Restart
Earlier this week, Comair welcomed good news as shareholders voted to implement its business rescue plan. The airline has been in limbo since May when it entered voluntary business rescue to prevent bankruptcy.
It’s been nearly four months since South Africa’s Comair entered voluntary business rescue. The airline, which also operates under the British Airways brand for South Africa, has been in talks to improve the sustainability of its operation. Earlier this week, a decision was made on its fate. On Friday, September 18th, Comair announced that its shareholders had accepted a business rescue proposal. For a 99% stake in the airline, an investment consortium of former board members and executives will inject R500m ($30.6m) into the carrier.
However, to fully realize the restructuring of Comair, the airline will also need a further R1.4bn ($85.7m). This will come in the form of debt. Just less than half the money (R600m or $36.7m) will be made of new debt. The remainder will be recorded as deferred debt.
Comair expects to receive the first portion of its investment by November. It will receive two tranches of R50m ($3.1m), which will help the airline begin going through its priorities. Among the airline’s goals are: employee retention; fleet restructuring; and operating cost reduction.
Comair is confident that if suspensive conditions are met, the new plan will save 1,800 jobs at the airline. In a statement, the CEO of Comair, Wrenelle Stander, said that without the intervention, the airline would have collapsed. She said, “When the lockdown happened, business rescue became the only responsible course of action. Had we not made that tough decision, Comair would not have flown again. There may still be a few bumps on the way ahead, however, now that the plan is adopted, at last, clearer skies are now in sight.”
That said, not everyone at Comair will keep their jobs. Before its voluntary business rescue, the airline had 2,200 employees. Now 400 of these staff members will leave the airline through voluntary leave or early retirement.
More leavers on the books are some of Comair’s aircraft. The airline will forsake two planes to operate a 25 aircraft strong fleet, which will include two MAX aircraft.
If everything goes well, Comair will be up in the skies again by December. Throughout the business rescue proceedings, the airline has not needed to forgo an important relationship with British Airways nor its low-cost arm kulula.com. These services can continue by the end of the year, with scheduled increases over seven months to restore Comair’s flight schedule by June 2021.
The airline hopes to finish business rescue proceedings by March 31st, 2021. At this point, it will work towards allocating up to 15% of its shares to a Broad-based Black Economic Empowerment investor.
