Metaco, a strategic leadership consultancy acquired by Comair (South Africa) (MN, Johannesburg O.R. Tambo) last July, has accused the South African carrier of going back on their agreement and "grinding it into the ground in the process", the online news site News24 has reported.

Comair, which operates scheduled services on domestic routes as a British Airways (BA, London Heathrow) franchisee and operates as an LCC under its own Kulula Air (MN, Johannesburg O.R. Tambo) brand, bought Metaco as part of a diversification strategy. It aimed to set up an innovative academy for the aviation sector, Metaco said in a statement posted on its website on October 17. The consultancy would continue to provide "team and leadership development at commercial rates to support intensifying change in the Comair Group" and also consult the airline's external client base.

At the time of the purchase, then-CEO of Comair Erik Venter, who resigned in May 2019, said the acquisition fitted well with the company's existing training business running courses for pilots, cabin crew, ground staff, and travel and tourism. It had already been working with Metaco over the previous two years, he added.

Comair bought a 100% stake in Metaco for ZAR33.5 million rand (USD2.3 million), with a downpayment of ZAR12.8 million (USD0.88 million) and the rest to be paid on an earn-out basis over six years, the consultancy said in its statement.

"But, with a sudden about-turn to their plans, Comair sought to disinvest from Metaco within a year, leaving Metaco's owners with just a shell of the thriving company they previously had. Now Metaco has had to instigate costly arbitration proceedings against Comair to resolve the dispute," the statement outlined.

It added that the carrier's use of its services was cut back by 80% within six months of the acquisition, as part of cost-cutting implemented by the airline.

Venter was replaced in July by two joint CEOs, Glenn Orsmond and Wrenelle Stander. They alleged that Metaco was insolvent and was in breach of the sale agreement and later demanded the refund of the ZAR12.8 million plus interest, according to Metaco, which has since launched arbitration proceedings against Comair.

Comair commented to the South African financial website Fin24: "We hold our business partners to the same high standards. Unfortunately, not all mergers and partnerships work out and that was the case with Metaco. The matter is subject to litigation and we do not intend to conduct those proceedings through the media."