Comair has taken the most significant step along the path towards getting ‘back to business’ and emerging from business rescue.
On Friday September 18, a “vast majority” of creditors and shareholders voted to adopt the business rescue plan.
In terms of the business rescue plan, the preferred investment consortium, comprising a number of former Comair board members and executives, will invest fresh equity of R500m (€25m) in return for a 99% shareholding once the suspensive conditions set out in the business rescue plan have been met. Up to 15% of this will be allocated to a suitable B-BBEE partner within 12 months.
During the next two months R100m (€5m) of this will be paid in two equal tranches as secured post-commencement finance.
Additional funding from lenders of R1.4bn (€70.6m) is required and this will comprise R600m (€30m) in new debt and R800m (€40m) in deferred debt, with capital payments deferred for a year and interest for six months.
Comair will be de-listed from the JSE and a new board constituted.
The turnaround plan will focus on reducing operating costs and growing ancillary revenue. The workforce of 2 200 employees will be reduced to 1 800 through voluntary retrenchment and early retirement programmes, as well as the Section 189 retrenchment process that began prior to business rescue commencing.
It is intended that the fleet be restored to 25 aircraft, including two Boeing Max aircraft. The aircraft will gradually return to service from December with a seven-month ramp-up period until June 2021.
Existing relationships will be maintained with British Airways, Discovery Vitality, Slow Lounges and Boeing.
Comair CEO, Wrenelle Stander, said: “When the lockdown happened, business rescue became the only responsible course of action. Had we not made that tough decision, Comair would not have flown again. There may still be a few bumps on the way ahead, however, now that the plan is adopted, at last clearer skies are now in sight.”
Richard Ferguson, one of the business rescue practitioners, said a number of suspensive conditions in the plan must still be met. If this does not happen, then the company will be wound down in a structured manner to achieve the best return for creditors.
“That doesn’t diminish what an important moment this is for Comair, its employees, the investors and the South African flying public. After nearly six months of intensive work and negotiation in a fraught economic environment, it is an exceptionally positive result.”
Glenn Orsmond, representing the Comair Rescue Consortium, said Comair planned to recommence air services in December with both the British Airways and kulula brands.
“We are thankful for the support of the creditors and shareholders and humbled by the overwhelming support from the Comair staff. We are excited at the prospect of rescuing Comair and restoring it to its former position as the pre-eminent airline in South Africa.”
The business rescue process should be concluded by March 31, 2021, after which Comair has to continue to operate as a sustainable business.