South African Comair enters administration

Comair, South African passenger airline and a franchise of British Airways, entered administration on May 5, 2020.  The airline became the third carrier from South Africa to reach the brink of collapse within a week’s span.  

Comair announced that the group ceased share trading and entered business rescue on May 5, 2020. While the airline had already been suffering financial problems, it said COVID-19 crisis brought matters to a dire state. 

Comair has operated no passenger flights due to the lockdown in South Africa since March 26, 2020. The halt of all its operations completely eroded the company’s revenue base, while fixed overhead costs remained, explained Comair CEO, Wrenelle Stander. “The only responsible decision is to apply for business rescue.”

“Comair remains solvent and an important contributor to the South African economy. This is a necessary process to ensure a focused 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,” said Stander, as cited in the company’s statement. 

The company restructuring would build on its previous turnaround plan, aiming to preserve cash, cut costs, dispose of non-performing assets and strengthen the balance sheet. “The Section 189A process [workforce layoffs on a major scale – ed. note], which was part of this plan and that began on 23 March, will continue,” as noted in the statement.

Turnaround plan and financial burdens

While Comair faced an “unprecedented situation following the Covid-19 lockdown,” its financial problems reached further back. Prior to the crisis, the airline group reported over $30 million (R564 million) loss for the first half of 2020 (financial) year. 

At the time, the company’s revenues grew by 3%, while costs – by 14%, as it had some “underperforming investments” and “significantly” higher fleet and maintenance costs. In 2019, the carrier added five leased Boeing 737-800 and one Boeing 737 MAX 8 aircraft to its fleet, which stands at 20 all Boeing 737 jets as of May 6, 2020. 

“While the decision to renew our fleet was the right one at the time, the pace of renewal in an underperforming economy placed a burden on operating costs and profitability,” Stander explained back then.  

“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,” said Stander.

Comair is already the South African airline to enter turbulence within a week’s span. 

South African Express, a domestic and regional airline also owned by the state but managed independently from SAA, was declared on provisional liquidation on April 30, 2020 ‒ a month after suspending all operations.

On May 1, 2020, the country’s government rejected another payout for the country’s national carrier, South African Airways, announcing a new airline would be created instead. 

Comair is an airline from South Africa, which operates scheduled services on domestic routes as a British Airways franchisee.  The company also operates a low-cost carrier under a separate brand

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