The business rescue practitioners of Comair, the owner of kulula.com and the local operator of British Airways, believe there's a reasonable prospect for the airline to be saved as its assets exceed its liabilities.
The airline operator, which was struggling before the lockdown began at the end of March that grounded all its flights, went into business rescue earlier this month. Business rescue practitioners Shaun Collyer and Richard Ferguson told creditors and other stakeholders that the 77-year-old company had R7.42 billion in assets on its balance sheet compared to liabilities of R5.48 billion.
The assets include R790 million that was unrecoverable after SAA entered business rescue in early December 2019. The money was for outstanding payments still owed on a R1.1 billion settlement in a Competition Commission case.
The practitioners said the airline was competitively well placed with 39% market share for domestic travel. A successful rescue would, however, depend on the support of all stakeholders.
Before going into business rescue, Comair had been lobbying the state for "special aid" to the airline industry through industry initiatives to help deal with the devastating impact of the covid-19 pandemic that triggered the lockdown.
A week before going into business rescue, the company informed shareholders that it only expects to resume flights in either October or November.
Late in April Comair had asked staff to either take leave or unpaid leave for the extended lockdown period, as it could not afford to pay employees their full salaries.
It announced towards the end of March - just ahead of the national lockdown and flight bans - that it had begun a restructuring process to improve efficiency and financial sustainability. Although it reported a 3% growth in revenue during the first half of its financial year, this was not enough to sustain additional costs of 14%, the group previously said.
In terms of the Companies Act, the business rescue practitioners will now prepare a plan in consultation with creditors, shareholders, registered trade unions and employees. If approved and adopted, the plan would be then be implemented.
The practitioners aim to publish a business rescue plan by 9 June 2020 and have a vote to approve a final plan on 24 June.
Apart from Comair and SAA being in business rescue, state-owned regional airline SA Express is in provisional liquidation after a failed business rescue attempt.