Home » Aviation: Comair becomes latest South African carrier to file for business rescue

Aviation: Comair becomes latest South African carrier to file for business rescue

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South African Comair court Comair

South African airline, Comair is the latest carrier in the country’s battered aviation industry to file for the somewhat bankruptcy protection after South African Airways and regional carrier SA Express.

The British Airways franchisee, which also offers flights under its own low-cost Kulula brand, said its decision to enter into business rescue is meant to “restructure the airline as a sustainable business” in light of the coronavirus pandemic.

Prior to the crisis, Comair made a pre-tax loss of R645 million ($35 million) for the six months to December 31. “While we had started making good progress to fix the financial situation six months ago, the (COVID-19) crisis has meant we have not been able to implement it as we intended,” said chief executive Wrenelle Stander.

The airline has been badly affected by the government’s lockdown in response to the virus outbreak. “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,” Stander said.

Unable to operate passenger flights since March, the CEO last week said the company did not anticipate resuming services before October at the earliest. “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.”

Applying for business rescue – a South African process similar to bankruptcy protection – was the “only responsible decision” and a “necessary process to ensure a focused restructuring of the company takes place as quickly as possible,” Stander said, adding that through the business rescue process the carrier intends to “right-size operations to be more efficient, agile and customer-centric.”

The process, according to Strander will include reconfiguring Comair’s network and fleet mix, reviewing portfolios and joint ventures, increased digitization of the business, and new product development and delivery.

“We are confident that with the work we’ve already done and the support of our stakeholders we will get through this process and will be a more sustainable business, better positioned to continue serving the flying public and contributing to the South African economy,” the CEO added.

Joint business rescue practitioners Shaun Collyer and Richard Ferguson have been appointed as of Tuesday to oversee the process, and Comair is suspending trading on the Johannesburg Stock Exchange with immediate effect.

The unprecedented downturn in the global aviation industry as a result of the coronavirus crisis has also seen the likes of Virgin Australia and Air Mauritius go into voluntary administration over the past month.

Source: venturesafrica.com

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