Comair (South Africa) (CAW, Johannesburg O.R. Tambo) has suspended the trading of its shares on the Johannesburg Stock Exchange (JSE) and filed for business rescue citing protracted losses as well as uncertainty surrounding when it will be able to resume flights.
The firm said in a stock market filing that as per existing South African government projections it does not anticipate restarting commercial flights before October or November of this year. As such, it said, it is uncertain which of its operations - its British Airways franchise or its Kulula Air low-cost brand - will continue and on what basis.
"The Comair business model is sound as the airline has been profitable for the past 74 years," it said. "Unfortunately, due to the abovementioned restrictions, operations have ceased. The Board believes that, once again operational, Comair will take to the skies and return to being a major player in the South African airline industry."
Under business rescue, the carrier expects to restructure its business and emerge leaner and more financially buoyant. Shaun Collyer and Richard Ferguson have been appointed as joint business rescue practitioners with effect from May 5.
Last week, Comair said it had already undertaken several measures to cut costs including reducing headcount, halting plans to acquire Star Air (South Africa) (BRH, Johannesburg O.R. Tambo), terminating an unspecified number of B737-8 orders with Boeing (BOE, Washington National) while seeking compensation from the manufacturer, and lobbying the South African government for financial assistance.
Comair has already started a dialogue with a consortium of banks over bridging finance which it has described as "constructive" and "ongoing".
Comair is the first privately-owned South African carrier to enter business rescue, the equivalent of US Chapter 11 bankruptcy proceedings, and the third after state-owned South African Airways (SA, Johannesburg O.R. Tambo) and South African Express (EXY, Johannesburg O.R. Tambo).
