Kulula owner Comair to delist from the JSE as it adopts new rescue plan

Aviation company Comair has announced that a majority of its creditors and shareholders have voted to adopt the business rescue plan.

In terms of the business rescue plan, the preferred investment consortium – comprising a number of former Comair board members and executives – will invest fresh equity of R500 million in return for a 99% shareholding once the suspensive conditions set out the business rescue plan have been met.

Up to 15% of this will be allocated to a suitable BBBEEE partner within 12 months, it said. During the next two months, R100 million of this will be paid in two equal tranches as secured post-commencement finance.

Additional funding from lenders of R1.4 billion is required and will comprise R600 million in new debt. The remaining R800 million will be deferred debt, with capital payments deferred for a year and interest for six months.

Comair will be de-listed from the JSE and a new board constituted, the group said.

The airline said that the turnaround plan will focus on reducing operating costs and growing ancillary revenue.

This will see the current workforce reduced from about 2,200 employees to 1,800 through voluntary retrenchment and early retirement programmes, as well as the Section 189 retrenchment process that began prior to business rescue continuing.

It is intended that the fleet be restored to 25 aircraft, including two Boeing Max aircraft. The aircraft will gradually return to service from December with a seven-month ramp-up period until June 2021.

Existing relationships will be maintained with British Airways, Discovery Vitality, Slow Lounges and Boeing, it said.

Comair CEO, Wrenelle Stander, said the adoption of the business rescue plan will save 1,800 jobs.

“Entering business rescue was a difficult decision, particularly as good progress was being made to fix the financial situation, however, the extraordinary circumstances of the lockdown meant the company was unable to earn any revenue,” 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.”

Richard Ferguson, one of the business rescue practitioners, noted that a number of suspensive conditions in the plan must still be met. If this does not happen, then the company will be wound down in a structured manner to achieve the best return for creditors.

“That doesn’t diminish what an important moment this is for Comair, its employees, the investors and the South African flying public. After nearly six months of intensive work and negotiation in a fraught economic environment, it is an exceptionally positive result,” he said.

Comair plans to recommence air services in December with both the British Airways and Kulula brands.

Should everything go according to plan the business rescue process should be concluded by 31 March 2021, after which Comair will continue to operate as a sustainable business.


Read: Kulula parent Comair hopes to fly again in December

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Kulula owner Comair to delist from the JSE as it adopts new rescue plan