Comair CEO Wrenelle Stander says that the only responsible decision is to apply for business rescue.
Comair has announced that it will enter business rescue to safeguard the interests of the company and its stakeholders after Covid-19 disrupted the implementation of a turnaround plan.
Comair CEO Wrenelle Stander said in a statement that the company faced an unprecedented situation following the Covid-19 lockdown. She said that while the company had started making good progress to fix its financial situation six months ago, when the company reported a loss of R564 million, Covid-19 had disrupted its plans to implement the turnaround plan.
“We completely understand and support the government’s reasons for implementing the lockdown, however, as a result, we have not been able to operate any flights. Now that the phased lockdown has been extended the grounding is likely to endure until October or even November. These extraordinary circumstances have completely eroded our revenue base while we are still obliged to meet fixed overhead costs. The only responsible decision is to apply for business rescue.”
Comair was required to stop all flights when the lockdown was implemented on 26 March and has not operated any passenger services since. Lockdowns worldwide have also affected the global airline industry and a number of carriers have gone out of business.
“Comair remains solvent and an important contributor to the South African economy. This is a necessary process to ensure a focussed restructuring of the company takes place as quickly as possible so we can take to the skies again as a sustainable business and play our part in the county’s airline industry,” said Wrenelle.
Shaun Collyer and Richard Ferguson have been appointed as the joint business rescue practitioners with effect from 5 May 2020. The company was also granted approval to suspend the trading of its shares on the JSE with immediate effect.
According to the statement, the business rescue process will build on the turnaround plan that was already being implemented and aims to preserve cash, cut costs, dispose of non-performing assets and strengthen the balance sheet. Comair will resume its operations in accordance with government directives and customers with existing bookings will be able to rebook flights within 12 months of their departure date. There will be no charge for any changes made before 1 November 2020.
“Through this process, we intend to right-size our operations to be more efficient, agile and customer-centric. This includes, but is not limited to, reconfiguring our network and fleet mix, reviewing portfolios and joint ventures, increased digitisation of the business and new product development and delivery,” Wrenelle concluded. “We are confident that with the work we’ve already done and the support of our stakeholders we will get through this process and will be a more sustainable business, better positioned to continue serving the flying public and contributing to the South African economy.”