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Hope is in the air for Comair and Kulula

Comair opted to quit while they were ahead in May this year, and it looks like the gamble's paid off. Thanks to investors, and a favourable ruling from the Competition Tribunal, Comair could be back on track as early as December this year.
Hope is in the air for Comair and Kulula

Comair makes a move to save its business

After 65 years in business, amid ongoing travel restrictions in South Africa, Comair willingly entered into business rescue this May. The decision was made in an attempt to safeguard one of the country’s longest-running airlines and the two airlines associated with the brand, Kulula and British Airways.

The move came in an attempt to protect the company and its stakeholders from the troubled months ahead. While no company wants to take a breath to regroup, Comair made this decision to focus on restructuring and rebuilding their business so that it may rise again in better times.

It was a wise decision that helped the company to remain solvent in these difficult times and to enable them to better prepare for a quick recovery from worldwide travel restrictions.

The way forward for Comair

In September this year, seven individual investors, plus an investment vehicle named, Luther Capital, came to the fore, opting to buy 99% of the airline by means of a rescue deal.

The consortium’s targeting a December reopening for the airline, hoping to capitalise on the lucrative holiday season as well as travellers keen to take to the skies after months of restrictions.

Prior to the pandemic, Comair had 27 aircraft in operation. This has since been reduced to 23 in order to cut costs and streamline operations. The consortium aims to bring this back up to 25 as soon as feasible and have two Max aircraft in their sights to make up the numbers.

Unfortunately, the airline’s having to cut back on 200 of their employees too.

Comair set to rise again in December

While the South African Competition Commission expressed concern at the layoffs, it nonetheless found no competitive overlap with the consortium’s other interests. The Commission approved the merger subject to a few conditions.

Comair has agreed to reinstate these previous employees as soon as possible, agreeing to give them preference as soon as jobs are available for up to three years after flights resume.

The merged entity also has plans afoot to allocate shares to a BBBEE structure, including an employee share ownership programme.

The Commission regards these conditions as sufficient to allay public interest concerns and recommended that the Competition Tribunal approve the transaction.

Former joint chief executive of Comair, Glenn Orsmond, has expressed relief at the ruling and said that both BA and Kulula should resume flights in December 2020. That’s great news for people who were planning on booking Kulula flights at the usual low prices this festive season.

South African travel on the way up

While the travel industry as a whole has suffered severe blows this year, it’s encouraging to see that there is a way forward for travel and the economy in general.

It’s going to be exciting to witness how the country can emerge from the devastating economic stress of 2020 and rebuild tourism in the near future.

5 Nov 2020 13:03

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