Kulula parent Comair hopes to fly again in December

Comair, the parent company of two local brands, Kulula and British Airways domestic and regional, says it hopes to begin flying again in December, on condition that its business rescue plan is accepted.

Creditors and shareholders now have until 18 September to consider and adopt the plan.

The publication of the plan, Comair said, follows negotiations with a preferred investor which will see a fresh equity injection of R500 million in return for a 99% shareholding.

Up to 15% of this shareholding will be allocated to a suitable BBBEE partner within 12 months.

The first R100 million will be paid in two equal tranches in September and October as secured post-commencement finance. Additional funding from lenders of R1.4 billion is required in order to successfully implement the adopted plan. This will comprise R600 million in net new debt, the group said in a statement on Wednesday (3 September).

Existing debt will be deferred to provide the remaining R800 million, with capital payments deferred for 12 months and interest for six months.

Comair will be de-listed from the JSE and a new board constituted in due course.

“The turnaround plan is focused on rationalising operating costs and growing ancillary revenue.” Comair said.

“The workforce will be reduced from approximately 2,200 employees to 1,800 through a voluntary retrenchment and early retirement programmes, as well as the continuation of the Section 189 retrenchment process that the company commenced prior to business rescue.”

The fleet will comprise 20 aircraft of which 17 will be next-generation Boeing 737-800s and the remaining three Boeing 737-400s.

“The aircraft will gradually return to service from December with a seven-month ramp-up period until June 2021,” Comair said.

Other elements of the offer include maintaining the existing relationships with British Airways, Discovery Vitality and Boeing.

“In the event that the suspensive conditions in the plan are not met, the plan details how the company will be wound down in a structured manner as this will achieve a better return for creditors than a liquidation,” Comair said.

Richard Ferguson, one of the business rescue practitioners, said that if creditors approve the plan the business rescue process should be concluded by 31 March 2021, if not sooner, after which Comair will continue to operate as a sustainable business.

“It is important to understand that what happened to Comair was the result of an eco-system problem that has seen some 600 airlines around the world cease to operate. It was not something that was business specific. Comair is a national asset. Getting it back in the air will save 1,800 jobs, provide the flying public with more choice and competitive fares, strengthen the aviation sector and contribute to the broader South African economy,” Ferguson said.

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Kulula parent Comair hopes to fly again in December