- Comair needs more working capital after dealing with the fallout of high oil prices and international travel restrictions over the festive season.
- In their latest report, Comair's business rescue practitioners say why more money is needed - but don't specify how much.
- The preferred bidder has already raised some of the additional funding needed and is busy drawing up a plan to raise the rest.
Comair needs to raise more working capital after it had to deal with the fallout of high oil prices, international travel restrictions during the December holiday period, and the "severe" impact of the temporary suspension of its flights.
This is according to the latest report by the company's business rescue practitioners. The report does not say how much funding needs to be raised.
Comair, which operates its own low-cost airline kulula.com, as well as British Airways domestically under a licence agreement, went into business rescue in May 2020. The Comair Rescue Consortium (CRC), comprising several former Comair board members and executives, was chosen as preferred bidder.
According to the report, Comair needs the additional funding in the short and medium term. The report adds, however, that the CRC has already raised a significant part of the working funding capital needed and is preparing a plan to raise the rest.
"Although the Brent Crude Oil price appears to have stabilised at circa US$110 per barrel, the impact on the operational performance of airlines worldwide, including the Comair, has been significant. This, together with the 'red listing' of South Africa during December 2021 and January 2022, has resulted in the company needing to raise further working capital," say the rescue practitioners.
The operator has faced a number of hiccups in recent years. Most recently, in mid-March, regulator the SA Civil Aviation Authority (SACAA) imposed a precautionary suspension of Comair's Aircraft Operating Certificate (AOC) for five days after what it called "a series of incidents", including issues with the landing gear indicator on one of the flights.
Meanwhile Comair's legal battle in a US court to cancel a purchase agreement of eight 737 MAX planes from US manufacturer Boeing still continues. The Boeing 737 MAX passenger airliner was grounded worldwide between about March 2019 and December 2020 after two fatal crashes - one by Lion Air and one by Ethiopian Airlines.
The rescue practitioners also continue negotiations with aircraft lessors on revised short-term arrangements.
Fin24 reported last week that Comair decided to halt a retrenchment process kicked off in March after pressure from the National Union of Metalworkers of SA (NUMSA) and the SA Cabin Crew Association (SACCA), but says it still needs to find ways to reduce staff and costs in order to remain sustainable.
In December last year the Competition Tribunal approved FirstRand Bank's acquisition of Comair's airport lounges in Johannesburg, Cape Town and Durban to get a cash injection of about R250 million.