Comair operates its own low-cost airline Kulula.com as well as British Airways domestically under a licence agreement.
- Comair hopes to begin flying again in December if a proposed business rescue plan, published just before midnight on Wednesday evening, is accepted.
- The Comair Rescue Consortium (previously known as the Moritz Consortium) is the preferred offer and consists of, among others, former Comair directors.
- The aim is to de-list Comair from the JSE and create a new board in due course.
Comair hopes to begin flying again in December if a proposed business rescue plan, published just before midnight on Wednesday evening, is accepted.
Comair operates its own low-cost airline Kulula.com as well as British Airways in South Africa under a licence agreement.
The JSE-listed group went into business rescue in May this year after all its flights had to be grounded at the end of March due to the national coronavirus lockdown. It has not restarted flights yet.
Comair’s rescue practitioners have now accepted a proposal by the Comair Rescue Consortium (previously known as the Moritz Consortium) as their preferred offer to take the group forward.
The consortium includes ex-Comair board members Martin Moritz, Rodney Sacks and Piet van Hoven, as well as other high net-worth individuals including Hilton Schlosberg and Steven Herring, as well as Luthier Capital. Moritz, Van Hoven and Sacks have over forty years’ experience each, serving in various board and executive capacities at Comair.
The turnaround plan is focused on rationalising operating costs and growing ancillary revenue, including reducing the work force from approximately 2 200 employees to 1 800.
“The consortium brings with it an experienced management team, ex-Comair executives, all with extensive experience within Comair including Glenn Orsmond, Kirsten King, Brian Kitchin, Reshika Singh, Iain Meaker and Gabriel Moritz,” the consortium said in a statement.
“We are excited at the opportunity to rescue Comair, to turn the business around and restore Comair to its position as the pre-eminent airline in South Africa,” Glenn Orsmond, a member of the consortium and its management team, told Fin24 on Thursday morning.
Creditors and shareholders now have until 18 September to consider and adopt the plan, according to a statement.
The aim is to de-list Comair from the JSE and create a new board.
The publication of the plan follows negotiations with the consortium, which will see a new equity injection of R500 million in return for a 99% shareholding. Up to 15% of this shareholding will be allocated to a suitable B-BBEE partner within 12 months.
Additional funding from lenders of R1.4 billion is required in order to successfully implement the adopted plan. This will comprise R600 million in net new debt.
The fleet will comprise 25 aircraft, of which 17 will be next-generation Boeing 737-800s and the remaining three Boeing 737-400s. This fleet mix increases the proportion of owned aircraft, which limits exposure to foreign currency risk.
Other elements of the offer include maintaining the existing relationships with British Airways, Discovery Vitality and Boeing.
Richard Ferguson, one of the business rescue practitioners, said in the statement that if creditors approve the plan, the business rescue process should be concluded by 31 March 2021, if not sooner, after which Comair will continue to operate as a sustainable business.
In the event that the suspensive conditions in the plan are not met, the plan details how the company will be wound down in a structured manner as this will achieve a better return for creditors than a liquidation.