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Comair’s business rescue practitioners outline plan:
Comair is unlikely to start operating again before November this year, notwithstanding the easing of restrictions on air travel as the airline requires a substantial cash injection, the company’s business rescue practitioners have told creditors and employee representatives.
The aircraft are currently in a preservation programme to ensure that they are ready to fly again, the resumption of operations now, would however require securing fuel suppliers and covering numerous other costs which the airline would not be able to meet without a significant cash injection.
The business rescue practitioners confirmed they were in discussions with funders to recapitalise the airline in order to resume domestic passenger operations by 1 November. Over 30 potential funders had been contacted and six are progressing discussions.
To ensure the future sustainability of the airline, Comair had acquired Infinea’s 50% shareholding of Nacelle. The negotiations began before Comair entered business rescue and the deal will give it full control of IT infrastructure, customer data, flight systems and support services. Comair is not able to fund the deal now. It has agreed to pay in instalments over 17 months once funding has been secured.
The practitioners said the proposed business rescue plan would include the rationalisation of the current fleet from 27 aircraft, including the grounded Boeing 737 MAX8, to 13 737-800s and three spare 737-400s.
The business rescue practitioners had consulted extensively, both in South Africa and abroad, and it was considered that a downsized fleet would be more in keeping with what the company could afford to operate and demand for air travel post the Covid-19 crisis.
Shaun Collyer, one of the business rescue practitioners, said that employees had been placed on unpaid leave and retrenchment proceedings are continuing under the auspices of the CCMA.
“This unfortunate hardship has been imposed on Comair employees as a consequence of the Covid-19 lockdown and State-of-Disaster Act.”
Comair would focus on its airline business.
Creditors would be paid according to the probable liquidation dividend determined in accordance with the provisions of the Companies Act through:
- The sale of non-core assets;
- Any equity capital raised and/ or;
- The issuing of shares.
The target date for this is 31 October 2020.
In terms of the restructuring plan, it is likely that the existing shareholder base will be substantially diluted.
The business rescue practitioners intend to have substantially implemented the plan by 31 March 2021, at which point the company will be handed back to the board of directors and management.
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