South Africa’s Comair Enters Business Rescue

Filed Under: British Airways

It’s not a good time for aviation anywhere, though it’s an especially bad time for aviation in South Africa. South African Airways is being cut off by the government, and a new national airline is expected to be formed. On top of that, SA Express is liquidating.

It has now been announced that another South African airline is entering business rescue, which South African Airways did in late 2019.

Comair enters business rescue

Comair has entered voluntary business rescue. For those of you not familiar with Comair, this is the British Airways franchise in South Africa (I flew them last year from Johannesburg to Cape Town). If you see what looks like British Airways 737s flying around Africa, those are Comair planes.

Two Comair planes at Johannesburg Airport

Comair has a fleet of about 20 Boeing 737s. In addition to operating domestic flights within South Africa, the airline also operates flights to Mauritius, Namibia, Zambia, and Zimbabwe.

British Airways owns a roughly 11% stake in the company, and they use British Airways Executive Club as their frequent flyer program.

Comair is also the parent company of Kulula.com, a South African low cost carrier that operates a fleet of 10 737s within South Africa.

What is business rescue, and why?

With this business rescue process, a specialist practitioner has taken over control of the company, with the goal of maximizing the odds of survival for the company, or at a minimum achieving a better return for creditors than if the company were to just outright liquidate.

This has come after South Africa instituted a five week nationwide lockdown, causing flights to be cancelled. Comair had already announced a restructuring in late March aimed at controlling costs, so this is the extension of that.

However, Comair wasn’t exactly doing great coming into this. The airline lost over 30 million USD in the six months leading up to February 2020.

As Comair CEO Wrenelle Stander describes the decision:

“These extraordinary circumstances have completely eroded our revenue base while we are still obliged to meet fixed overhead costs.

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.

We are confident that with the work we’ve already done and the support of our stakeholders we will get through this process and will be a more sustainable business.”

Comair 737 business class cabin

Bottom line

South Africa’s Comair has entered business rescue, as the airline is no longer able to meet obligations. While the airline wasn’t doing great going into the current pandemic, they weren’t as much of a basket case as South African Airways.

Hopefully Comair emerges from business rescue in a sustainable way, or else there’s going to be very little connectivity within South Africa, and between South Africa and neighboring countries.

Comments
  1. 29% pre-coronavirus unemployment, but at least SA’s draconian measures made people feel better, right? Total lockdown for something which killed 100 people in the entire country.

    The overreaction to this virus has effectively brought down the global economy.

  2. This is a shame. Comair is a really lovely airline – had some great experiences on them – and their lounges are lovely. Certainly better than BA shorthaul proper.

  3. Ah yes, taking prompt action early was totally an overreaction versus doing nothing and trending toward the 9/11 worth of deaths we are experiencing every day in the US. Got it.

  4. @JMM do you think there’s a chance these so-called draconian measures might just be the reason that *only* 100 people have been killed? just curious. anyway, keep counting.

  5. Do these fools like @JMM make stupid comments just do it to gain their 15mins of attention? What a dufus.

  6. To be frank Comair is good but Kulula is not in same class as it’s competition – FlySafair.

    Re South African government , they have shown a degree of leadership not seen in many far more wealthy countries.

  7. Do these fools like @Crosscourt make the same stupid comments about other comments just do it to gain their 15mins of attention? What a dufus.

  8. @TProphet – Indeed, because there’s no happy medium between a blanket ban on all movement (+ ban on alcohol sales, etc.) and the idiocy we saw from US CBP and NYC in Feb/Mar.

    @DW – Actually I don’t, with 94% certainty. But I’ll definitely keep counting. https://www.spiked-online.com/2020/04/22/there-is-no-empirical-evidence-for-these-lockdowns/

    I’m curious what South Africa’s plan is – stay cut off from the rest of the world until a cure to COVID-19 is found?

  9. “However, Comair wasn’t exactly doing great coming into this. The airline lost over 30 million USD in the six months leading up to February 2020.”

    That was mainly because Comair had to write down money they’re owed by SAA, that they now don’t expect to recover. MN were profitable up until then, and have been throughout their history.

    I hope they survive.

  10. Comair is a highly efficient airline apart from operating some older 737’s.

    @JMM, I’m a doctor. You need to understand that the worst case infectious disease risk is a condition with high contagion but relatively low mortality. Its spread can bankrupt countries with advanced health services.

    Here in Australia our pandemic has been well-managed, after the virus was brought in by asymptomatic Americans when their own country was not doing enough testing. And we intend to keep our borders completely closed to hotspots like the USA and Europe until a vaccine arrives.

    I am the most pro-American person I know. And it saddens me that the premature lifting of your lockdown means that we will have to close our doors to you indefinitely. I will really miss visiting America. But in the short-term the rest of us will have to keep ourselves protected from you, because mixing with people from highly infected countries like yours places at risk the fruits of our own lockdown sacrifices.

    It may ultimately help Comair: South Afticans will travel in their region rather than longer-haul.

  11. Sad thing about some Americans think they don’t need to wear masks in public. In fact, a security guard got killed from asking a patron to wear a mask as required by law. And of course you have people in Michigan thinking they can just charge into their state capital with firearms and not wear masks. I wonder how many of them got contaminated that day with Covid19 and how many of them will die from it? Sadly their family members will be collateral damage along with innocent bystanders who they come into contact with.

    But I digress. I flew Comair from Kruger Park to Cape Town few years ago. I hope to do that again in the future when world is rid of itself Covid19.

  12. @DavidF – Thank you for commenting. There are times I wish I were an Aussie, and now is one of them.

    Partner and I were just in Oz in September for our annual pilgrimage there, and it never fails to impress.

  13. @DavidF I completely agree with you AND I want to point out that the entire US never truly had a lockdown. The idiot in chief made a recommendation that was followed only by some. Here on the west coast our public health officials acted early and we still have another month of lockdown. I’ve been out of the house 5 times in eight weeks (to the chiropractor twice, the vet with my geriatric kitty, to the dentist when I broke a filling and to get a package because public works had my street torn up). We’re taking it seriously here and it shows with comparatively few deaths and none of the horror stories of NY. But the curve is stubbornly slow to fall.

    My point is that not all Americans are stupid – just most of us. We didn’t all lift our quarantine, just the states that apparently don’t believe in science. And I know that last two comments are going to get me flamed. It’s why I’ve refrained from wading into this discussion to this point and why I won’t be checking follow-up comments.

    But, come on people, you need only look at New Zealand, Australia, Iceland and a few other countries to understand the right way to do things and it’s not ending to lockdown because we’re tired of being at home. It’s lots of testing, contact tracing and a serious commitment to staying the f*** home. We were on target to have this thing down to almost nothing in June. After just a few days of restrictions lifted in a few states the date that models are showing is now late August. So, enjoy your beach time folks. The cost of your unwillingness to handle being cooped up is incalculable.

  14. Great to see the praise for Australia, luckily our Prime Idiot knows his limitations and has been deferring to medical experts. He’s never really like hard work and we’re all the better for it.

  15. I am a South African and I am proud of the way our Government handles our response to Covid-19. President Ramaphosa emerged as a formidable leader during a time of great distress for many. His team consists of world class scientists and he listens and respects science. We acted early and the results are clear to see. Yes, it “only” killed 100-odd people so far but that is because we did the right things early. Our total lockdown was fairly draconian but it worked by flattening the curve and allowing our medical sector to cope. For the most part citizens abided by the regulations and adapted quickly to the new normal. Our situation is what it is thanks to clever, committed people doing the right things.

    Re Comair/kulula, both are terrible airlines but I wish them the best and hope they emerge from this crisis intact.

  16. @Ed
    Nobody is out of the woods yet – the Australian PM’s desperation to get kids to school to free their parents to go to work threatens to ruin everything. And it’s based on bogus science: that no kids tested positive in late February and March ……..when you could only be tested if you had been in certain countries in the previous 14 days (when they were all at school.)

    Comair faces similar risks. South Africa is doing very well so far – and the number of HIV positive people on anti-virals might actually be helping! But we are at the start of a marathon, not a sprint, and one mis-step by their government could ruin everything and leave Comair without a market.

  17. It sounds like everyone has an opinionI’m from the UK and I hate that we’re being seen as having the worst death rate in Europe we have a brilliant NHS who have worked tirelessly through this pandemic that was brought to our shores. At the end of the day my feelings go out to those who’ve lost loved ones and may be struggling financially. I have followed the suggested rules and let’s face it that’s all any of can do and STOP BLAMING OTHER PEOPLE it’s an unprecedented situation

  18. @Tamara White
    That’s a mystifying comment. We have an idiot Prime Minister who, the day our medical advisors warned us to socially distance, gave a press conference at which he actually boasted about shaking the hands of every coronavirus victim he’d met earlier that day at a hospital. And was then shocked when he contracted the disease.

    I shut down my office and put all staff on home working 2 weeks before our stupid government advised everyone to do the same. I claim no great credit for my foresight: but I did not have the benefit of teams of highly-paid experts advising me, and it was still obvious to anyone with a brain where this was heading.

    Our idiot government then allowed hundreds of thousands of people to mingle together at the Cheltenham Festival. Our idiot PM droned on about an Englishman’s natural-born right to go to the pub.

    Either you want to live in a democracy — where morons like BJ are held to account — or, I guess, you don’t. It’s not about “blame”: it’s about us taking responsibility for holding our leaders to account.

  19. @The nice Paul – excellent post and well done for the way you handled your own office. The Coronavirus is a leveler of sorts and puts the quality of leadership in sharp focus. The leaders who looked at what happened elsewhere, learned from it and acted quickly had the most efficient responses. Unfortunately there is only a tiny window of opportunity to do this after which it spirals out of control. Unfortunately many missed this window because they were too busy arguing with the scientists, playing political games and blaming everibut themselves for the mess they allowed to happen.

  20. Really surprised there are still people like JMM out there who think lock down is a bad idea despite what has happened in Italy, Spain, the UK, and the US. You have the situation in New York where there have been so many deaths they struggled to deal with the volume of bodies, and these happened in first world countries. Guess what would happen in South Africa if they did nothing. If there were no lock down but thousands of people die everyday do you think there would be no impact on the economy? Shops and business would still be open but people would be scared to go out anyway. In the case of SAA or Comair passenger numbers would still plummet.

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