Virus-hit Comair files for voluntary business rescue

South Africa’s lone aviation group listing on the Johannesburg Stock Exchange (JSE), Comair, has decided to file for voluntary business rescue and to suspend its listing on the bourse. This follows it grappling with the major economic fallout from the Covid-19 pandemic.

The unprecedented move was announced in a JSE statement yesterday afternoon.

Comair, which owns low-cost airline kulula.com and operates British Airways local flights in South Africa, said the move is due to the company being “unable to operate given the current restrictions to air travel in the country”.

The latest announcement comes after the group put out a cautionary Sens statement on the JSE on Thursday, noting that it may only start flying again as late as October or November due to Covid-19 lockdown restrictions.

“It appears that restricted air travel may commence at Level 3, full domestic air travel at Level 2 and regional and international air travel at Level 1. The level of the prevailing Covid-19 risk will determine the progression from Level 5 to Level 1. It is not anticipated that Comair will commence operating prior to October or November 2020,” the group reiterated in its Sens statement yesterday.

The Comair board added that it is “of the opinion that the best option to ensure the long-term survival of the company is to implement a business rescue plan”, which it noted was in line with Chapter 6 of the (amended) Companies Act 71 of 2008.

“Under the direction of the right business rescue practitioner, a return to operations may be achievable once restrictions are lifted. The board accordingly resolved on 4 May, 2020 to commence with voluntary business rescue proceedings as provided for by Section 129 of the Companies Act,” it said.

“The Comair business model is sound as the airline has been profitable for the past 74 years. Unfortunately, due to the abovementioned restrictions, operations have ceased. The board believes that once operational again, Comair will take to the skies and return to being a major player in the South African airline industry,” it noted.

Comair said that in light of its decision to file for voluntary business rescue, its board had applied to the JSE Limited and had been granted approval for the suspension of trading in the company’s shares on the JSE with immediate effect.

Meanwhile, in a media statement released yesterday afternoon, Comair explained that its move to file for business rescue is aimed “to safeguard the interests of the company and its stakeholders” amid the Covid-19 crisis. It noted that travel restrictions related to the pandemic had “disrupted the implementation” of the group’s turnaround plan.

Comair CEO Wrenelle Stander said the company, which reported a half-year loss of R564 million for its 2020 financial year, faced an unprecedented situation following the Covid-19 lockdown.

“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. We completely understand and support the government’s reasons for implementing the lockdown, however, as a result, we have not been able to operate any flights,” he said.

“Now that the phased lockdown has been extended, the grounding is likely to endure until October or even November. These extraordinary circumstances have completely eroded our revenue base.”