Covid-19 lockdown places Comair in a "very difficult financial position"
The group has had to secure and manage the business by implementing turnaround processes.
Comair had already been experiencing financial headwinds prior to Covid-19, but said in a statement that the five-week lockdown has caused the situation to rapidly deteriorate to a point where the company finds itself in a very difficult financial position.
The group said in a statement that, throughout this challenging and uncertain time, its management has been working tirelessly to secure and manage the business effectively by implementing a turnaround process focusing on:
- Cash preservation
- Disposal of non-performing assets and a strengthening of the balance sheet
- Working with external restructuring advisors to reduce costs
- Preserve short-term liquidity
- Restructuring the balance sheet for long-term sustainability
However, the group said that since the introduction of lockdown, there has been no revenue generated by any of the business divisions. The group has had to:
- Finalise phase one of the Section 189A process, resulting in a decrease of the number of executives, with a cost-reduction of R23 million
- Initiate phase two of the Section 189A process to reduce the number of staff overall
- Cancel the mutual termination of the STAR Air Cargo transaction
- Dispose of the Course Restaurant
- Close SLOW in the City
- Participate in industry initiatives to lobby government for special aid for the airline industry
- Commence negotiations with the banking industry for the purpose of securing bridging finance
Comair has also announced that it does not anticipate to start operating again before October or November 2020.
This follows the president’s introduction of a gradual upliftment of lockdown in terms of a five-level risk assessment process in which air travel has been restricted at Risk Level 3, domestic air travel is only allowed at Risk Level 2, and regional and international air travel is only allowed at Risk Level 1.