Comair broke deal consultancy

A family-owned consultancy acquired by Comair a year ago has accused the JSE-listed aviation company of reneging on the purchase agreement.

A family business acquired by Comair a year ago accuses the JSE-listed aviation group of reneging on the purchase agreement and “grinding the business into the ground”.

In July 2018, Comair acquired Metaco, a privately owned leadership consultancy, in its diversification strategy to create additional revenue streams. A month later, then-CEO Erik Venter said Metaco fitted well with Comair’s training business providing courses for pilots, cabin crew and ground operations staff. Venter announced his retirement, for personal reasons, from the company in May 2019.

Comair operates two airline brands, Kulula and British Airways, and runs businesses in aviation training, catering, hospitality, tourism and airport lounges. It bought 100% of Metaco, which had provided services to it for two years, for R33.5m with a R12.8m down payment.

“The balance of the total purchase price was to be paid on an earn-out basis over six years,” Metaco founder and MD Barbara Walsh said on Thursday.

She said that within six months of the deal Comair, cut use of its services 80% as it cut costs. This compromised Metaco’s income and profitability.

For the year to end-June 2019 Comair pretax profit fell 82% to R86m as a weaker rand and rising oil prices hiked operating expenses. Profit was reduced by about R200m (to be claimed from Boeing) by global grounding of the Boeing 737 Max 8 in the second half. Comair took delivery of one of these aircraft soon before they were grounded after a crash in Ethiopia.

Walsh said that at the end of June the two CEO-designates, Glenn Orsmond and Wrenelle Stander, who were due to replace Venter at the end of July, alleged Metaco was insolvent and the sellers were in breach of the sale agreement. In mid-July, Orsmond demanded the refund of the R12.8m plus interest.

Comair did not respond to a request for comment.