- Creditors of Comair have accepted the rescue plan offered by the Comair Rescue Consortium.
- Comair owns kulula.com and operates British Airways domestically as part of a licence agreement.
- Another R1.4 billion in funding is still needed and some 400 jobs will be cut.
The Comair Rescue Consortium announced on Friday that creditors and shareholders had overwhelmingly approved its business rescue plan.
Richard Ferguson, one of the business rescue practitioners, said in a statement that a number of suspensive conditions in the plan must still be met. If this does not happen, then the company will be wound down in a structured manner to achieve the best return for creditors.
If the plan is implemented, Comair will be de-listed from the JSE and a new board constituted.
"Comair has two excellent, well-established brands, kulula and British Airways, placing it in a unique position to fill the void in the market for both leisure and business travellers. The retention of the British Airways franchise and partnership with Vitality are fundamental to growing these two brands into the future," the group said in a separate statement.
In terms of the business rescue plan, the preferred investment consortium, comprising several former Comair board members and executives, will invest fresh equity of R500 million in return for a 99% shareholding once the suspensive conditions set out the business rescue plan have been met. Up to 15% of this will be allocated to a suitable B-BBEEE partner within 12 months. During the next two months R100 million of this will be paid in two equal tranches as secured post-commencement finance. Additional funding from lenders of R1.4 billion is required and will comprise R600 million in new debt.
The remaining R800 million will be deferred debt, with capital payments deferred for a year and interest for six months.
A turnaround plan will be implemented prior to recommencing normal air services, hopefully by December this year. Should everything go according to plan, the business rescue process should be concluded by 31 March 2021, after which Comair will continue to operate as a sustainable business.
The turnaround plan will focus on reducing operating costs and growing ancillary revenue. This will see the current workforce reduced from about 2 200 employees to 1 800 through voluntary retrenchment and early retirement programmes, as well as the Section 189 retrenchment process that began prior to business rescue continuing.
The Comair Rescue Consortium includes former Comair Board members Martin Moritz, Rodney Sacks and Piet van Hoven as well as other high-net worth individuals like Hilton Schlosberg and Steven Herring as well as Luthier Capital. Moritz, Sacks and Van Hoven have over forty years' experience each, serving in various board and executive capacities at Comair.
The management team will include former Comair executives, including Glenn Orsmond, Kirsten King, Brian Kitchin, Reshika Singh, Iain Meaker and Gabriel Moritz.
The intention is to retain the 25 aircraft fleet, including two Boeing Max aircraft and to grow the business domestically and regionally while minimising staff retrenchments and ruthlessly cutting overheads and improving efficiencies.
Trade Union Solidarity welcomes the approval of the business rescue plan for Comair. It regards it as a major boost for the morale of all its members employed by Comair and one step closer to ensuring employees' jobs are saved and retained.
Solidarity's organiser for the defence and aviation sectors Jannem Goussard says that, although the plan has been approved, employees are not out of danger yet. The approval is subject to a major suspensive condition contained in the plan, requiring collective labour, represented through the majority trade unions, to conclude a collective agreement with the company and which binds employees to various agreements.
During Friday's online meeting, Goussard told creditors that the impact of no work and no income is without a doubt, the greatest inhibitor to one's dignity and to fully understand the importance of the vote they had to consider regarding the plan.