Kulula operator Comair has announced it will enter business rescue due to the impact of the COVID-19 lockdown.
The announcement comes on the back of a half-year loss of R564 million in its 2020 fiscal year. The listed airline company also oversees British Airways operations in South Africa.
Comair CEO Wrenelle Stander said they face an unprecedented situation.
“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,” Stander said.
Comair said it was required to stop flying on 26 March 2020, and has not operated passenger services since this date.
It expects the phased lockdown will mean the grounding of flights will likely to continue until October or 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 stated.
Comair “remains solvent”
Comair noted that the COVID-19 crisis has had a severe effect on the global airline industry, with a number of carriers restructuring.
Stander emphasised that Comair remains solvent and an important contributor to South Africa’s economy.
“This is a necessary process to ensure a focussed 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 county’s airline industry,” says Stander.
The company said Shaun Collyer and Richard Ferguson have been appointed as the joint business rescue practitioners, with effect from 5 May 2020.
Comair was also granted approval to suspend the trading of its shares on the JSE with immediate effect. The business rescue practitioners will provide shareholders and all other stakeholders with further updates throughout the process.
The company said the business rescue process will “build on the turnaround plan that Comair management was already implementing”.
“It aims to preserve cash, cuts costs, dispose of non-performing assets, and strengthen the balance sheet. The Section 189A process, which was part of this plan and that began on 23 March, will continue,” Comair said.
No charge to change flights
Comair indicated customers with existing bookings will be able to rebook flights within 12 months of their departure date.
No charges will be applicable on changes made before 1 November 2020.
Stander added that Comair will resume its operations according to government directives and will continue to engage with the government to accelerate the opening of the airline industry.
“The health and welfare of our customers, crew, and the public is the overriding priority and we will only operate when we are sure we can do so safely.”
“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.”