By MUDIWA GAVAZA
Airline group Comair will go into business rescue and suspend its shares from trading on the JSE, it said on Tuesday.
Comair, which operates Kulula and has the franchise for British Airways (BA) in SA, resolved on Monday to start voluntary business rescue proceedings in line with the Companies Act.
The move is to safeguard the interests of the company and its stakeholders after the Covid-19 crisis disrupted the implementation of a turnaround plan, Comair said.
Due to the national lockdown to prevent the spread of Covid-19, the company anticipates that it will commence operating before October or November 2020.
“The Comair business model is sound as the airline has been profitable for the past 74 years. Unfortunately, due to the lockdown 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 SA airline industry,” said the company.
Comair applied for and has been given permission to stop trading of its securities on the JSE with immediate effect.
Shares in Comair were 4.76% weaker in afternoon trade on Tuesday at R1, giving the company a market capitalisation of R469.3m.
The airline’s balance sheet was already under strain before the coronavirus outbreak prompted governments to enforce travel restrictions, with the group swinging into a R564m headline loss in its half-year to end-December 2019. The group’s difficulties are the latest example of a wave of distress sweeping across corporate SA during the nationwide lockdown.
In a statement, Comair CEO Wrenelle Stander said the company faced an unprecedented situation after 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,” she said.
“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. 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 while we are still obliged to meet fixed overhead costs. The only responsible decision is to apply for business rescue.”
The Airlines Association of Southern Africa recently told Business Day that the industry, which contributes R180bn to the SA economy, was teetering on the brink of collapse if the travel restrictions were not lifted soon.