AIRLINE WOES: Comair business rescue on the ropes as efforts to raise funding fail

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The operator of Kulula and British Airways flights in SA faces the termination of its business rescue proceedings and possible liquidation as lenders refuse to throw it a R226m lifeline. And, because of this, Comair has defaulted on insurance and maintenance payments for its entire aircraft fleet.

Comair is in a perilous situation after its business rescue practitioners failed to convince lenders to throw more money into the restructuring process of the aviation company, which operates Kulula and British Airways flights in SA.The business rescue process of Comair is on the ropes as the R226-million requested by the rescue practitioners, Shaun Collyer and Richard Ferguson, on 2 July 2020 from commercial banks has failed to materialise.

It would also scupper Comair’s plan to return to the skies in November 2020 after the government imposed travel restrictions since 27 March to slow the spread of Covid-19. The Comair board placed the company under business rescue on 5 May because it didn’t have enough working capital to pay expenses and debt obligations.

Comair has also failed to pay more than R30-million to service providers that maintain, care, and repair its fleet of aircraft. As a result of non-payment, the service providers have discontinued the maintenance of Comair’s aircraft in their possession until all amounts due are paid in full. The service providers have taken a drastic decision of denying Comair access to the aircraft and “are not permitting movement of the aircraft for repositioning purposes”.

Collyer and Ferguson said before Redford Capital’s exit from Comair’s rescue proceedings, the firm recently received two unsigned offers from a group of investors to invest up to R1.5-billion in the company. This investment would be in the form of debt and equity, including a cash injection.

 

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