Kulula and British Airways could resume flights before the end of 2020 – Report

Comair, which runs Kulula and British Airways in South Africa, could resume its domestic flights by December 2020, reports the Sunday Times.

Comair, which is under business rescue, has reportedly received an offer from a consortium to inject R500 million into the troubled airline, while a further R600 million would be received from lenders.

Parts of the new plan were reportedly presented to creditors on Thursday;  however, it has asked for more time before publishing the full details, as the final offer from the preferred investor had only been received late on Friday.

The report stated that a rival bid by a Comair-Lanseria management consortium would have injected R700 million equity into Comair, reduced its debt, and allowed the airline to begin flying in October.

“There were five offers received. Deloitte independently assessed those that could be taken forward. This offer was selected as it had the most potential ensuring Comair could continue to operate,” said Comair business rescue practitioners Shaun Collyer and Richard Ferguson.

The preferred business rescue plan would reportedly see Comair’s staff cut by 400 to 1,800 employees, but a number of high-level staff – including former joint CEO Glenn Orsmond and former finance director Kirsten King – would be able to return.

Comair’s struggles

Comair was forced to enter business rescue in May 2020 because of the impact the COVID-19 lockdown had on its operations.

This followed a half-year loss of R564 million as part of the 2020 financial year.

“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,” Comair CEO Wrenelle Stander said.

“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 said that while it has needed to enter business rescue, Comair was still solvent and was an important part of the South African 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.

As part of its business rescue operations, Comair was allowed to halt the trading of its shares on the JSE, and the Sunday Times now reports that as part of the new business rescue plan, Comair would delist from the JSE permanently.

Customers with existing bookings will be able to rebook flights within 12 months of their departure date, Comair said previously.

No charges will be applicable on changes made before 1 November 2020.

“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,” said Stander.

New low-cost airline by Kulula founder

Kulula founder and former Comair CEO Gidon Novick recently revealed his plans to launch a new low-cost domestic airline in South Africa which focuses on using technology to drive efficiency.

“Technology has the ability to facilitate a seamless, efficient, and engaging relationship with our future customers,” Novick said.

The new airline will be funded through private capital and will not take on debt, said Novick.

“Staying away from debt is absolutely key to the success of launching a new low-cost airline,” he said.

The airline will launch with used aircraft that are either owned or leased and will mainly comprise narrow-body single-aisle aircraft like the Boeing 737 and Airbus A320.

Novick said that this is because South African airfares are already much lower than in developed countries, meaning local airlines have to adjust their business models accordingly.

Novick said that when the airline launches, it will first focus on the high traffic route between Johannesburg and Cape Town.

The launch date of this new airline is not yet clear.

Now read: New SAA set to relaunch in January 2021

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Kulula and British Airways could resume flights before the end of 2020 – Report