Embattled airline Comair has announced its business rescue practitioners (BRPs) on Thursday lodged a court application to convert the business rescue proceedings into liquidation proceedings.
One of the BRPs, Richard Ferguson, said with its two airline brands – British Airways, operated by Comair, and kulula.com, market share, modern aircraft fleet, experienced employees, sales and distributions channels, Comair was an inherently viable business. However, despite their best efforts, the BRPs had been unable to secure the capital required for the airline to recommence operations.
Comair had last week announced the suspension of all its flights, pending successfully securing additional funding.
This comes after the South African Civil Aviation Authority had grounded Comair on March 12 over serious safety concerns. Flights were operating by March 17 after Comair’s Air Operators’ Certificate (AOC) was reinstated.
Comair flight equates to about 40% of the country’s aviation capacity.
“We did our utmost to secure the funding, but when we were unable to do so, had no option but to lodge the application. It’s an extremely sad day for the company, its employees, its customers and South African aviation,” Ferguson said.
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After entering business rescue, Comair was able to start flying again when the Comair Rescue Consortium (CRC) invested R500 million for a 99% share of the equity in the company at the time.
Although the amounts indicated by the business rescue plan were invested, the company faced unforeseen issues, including three further Covid-related air travel lockdowns, the “Red Listing” of South Africa by certain European countries, the suspension of the company’s AOC in March by the regulator, as well as significantly high fuel prices experienced in the past five months.
Each of these events had a material negative impact on the business, Comair said, and the CRC were only able to finance the impact of these events up to a certain point.
“The BRPs’ ongoing requests to the CRC to provide a plan to raise the further funding necessary to absorb the balance of these and other future potential economic shocks were not successful. In the circumstances, the BRPs approached other lenders to raise the funding required. Regrettably, when this funding could not be secured before the existing funding was exhausted, scheduled flight operations were suspended on May 31.
“Comair’s BRPs continued the process to secure additional funding from other sources, but despite several parties expressing interest, they were unable to secure sufficient substantive commitment,” Comair said.
Ferguson said that the company’s employees and customers who held bookings or were owed refunds would now become creditors of the company. – Cape Times