Long-standing Comair director Rodney Sacks resigns

JSE-listed aviation company Comair [JSE:COM] announced on Tuesday that Rodney Sacks, a long-standing non-executive director, has resigned with immediate effect.

Derek Borer, the group's company secretary and an alternative non-executive director to Sacks, also resigned from the board with immediate effect.

Comair operates its own low-cost brand, kulula.com, as well as British Airways in South Africa as part of a licence agreement.

Fin24 reported in early November that concerns were raised at Comair's annual general meeting about the long tenure of board members. A resolution was approved at the AGM that directors who served for a period of 9 years or longer would be required to retire on an annual basis and if eligible, could stand for re-election.

Lindsay Ralphs, who is also the CEO of Bidvest, replaced Pieter van Hoven as Comair chair at the AGM. Van der Hoven, however, remains on the board as a non-executive director.

Ralphs told shareholders at the AGM that he was ready to "shake up" the board. Comair confirmed to Fin24 after the AGM that the issue of the long tenure of board members was on the agenda of the new chair.

At the AGM director of strategic leadership consultancy Metaco and a Comair shareholder Danny Tuckwood questioned why Borer, Comair's company secretary, had been standing in as an alternate director. Comair responded to Fin24 at the time that, although King IV on governance does not prohibit the company secretary from serving on the board as well, it is not desirable and would be addressed.

"Comair seems to have taken heed of these concerns," Barbara Walsh, MD of Metaco, told Fin24 on Tuesday.

Metaco, which was acquired by Comair in July 2018, is involved in litigation against Comair. Metaco accuses Comair of reneging on the agreement and "grinding it (Metaco) into the ground in the process". Since the matter is sub judice, Comair preferred not to comment on it at the time.

On Tuesday Comair's share price was trading 3.54% weaker at R3.00 per share.

Fin24 reported early in December that, according to Comair it is still too early to speculate about what will happen to outstanding payments it is owed by South African Airways (SAA) as part of a R1.1bn legal settlement.

Comair has so far maintained an unbroken 72 years of profitability. In its results announcement for the year to the end of June 2019, it announced that its headline earnings per share were 184% higher than in the previous year. It said this was a "direct consequence" of the massive R1.1bn payout it was awarded from SAA. The flag carrier had undertaken to pay the amount "over the next 3.5 years" and it is unclear how much of it the airline had paid already by the time it went into business rescue.

SAA went into voluntary business rescue early in December. The first meeting of the state-owned airline's creditors took place a few weeks ago. The creditors present at the meeting voted unanimously in favour of giving the two business rescue practitioners an extension until the end of February to publish their proposed business rescue plan.

Boeing 737 MAX

In March 2019 Fin24 reported that Comair was impacted by the woes of the world-wide grounding of the Boeing 737 MAX 8. Comair's 737 MAX 8 - which was delivered in February and used as part of its British Airways fleet - was the only aircraft of its type in commercial use by a South African airline.

Boeing subsequently agreed to defer the delivery of Comair's second Boeing 737 MAX 8. In mid-December 2019 Boeing announced that it is temporarily halting production of its grounded 737 Max 8 after the US Federal Aviation Administration indicated it would not approve the plane's return to service before sometime during 2020.

Update: Comair responded to Fin24 later on Tuesday afternoon to say that the official JSE SENS announcement earlier on the day about the resignations of the directors, is the extent of its comment for now.

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