Tuesday, 14 June 2022 12:39

Comair's application to be placed under provisional liquidation granted.

By Lehlohonolo Lehana.

The South Gauteng High Court in Johannesburg has granted airline operator Comair an application to be placed under provisional liquidation.

In the urgent court application, BRP Richard Ferguson, appointed as one of the company’s business rescue practitioners, said that "there is no longer a fair or moderate possibility of implementing the company’s approved business rescue plan."

"We are of the view that there is no longer a reasonable prospect of rescuing Comair so asking to discontinue business rescue and place it in liquidation. There is no longer a fair or moderate possibility of substantially implementing Comair's approved business rescue plan," BRP Richard Ferguson states in court documents. 

"The company does not have access to any further funding necessary to fund its operational costs and cannot meet any of its obligations towards its funding creditors and trade creditors."

Court documents show that Comair had a net loss of almost R500 000 for the year to end-February 2020, compared to a net profit of almost R900 000 for the prior year. Its total debt had increased from R2.2 billion at the end of June 2015 to R4.9 billion at 31 December 2019. Its debt burden had been growing partly because of a disastrous order of Boeing 737 Max planes.

Then it was hit by the Covid-19 pandemic and related hard lockdowns in March 2020. Consequently, Comair decided to go into business rescue in May 2020, halting flights, and its business rescue plan was adopted in September 2020. The plan anticipated that about 1 800 jobs will be preserved if Comair could be returned to sustainability.

The Comair Rescue Consortium (CRC) comprising several former Comair board members and executives, among others, invested R500 million for a 99% share of the equity in the company.  

Comair resumed flying on 1 December 2020. In April 2021 it was delisted from the JSE. The delisting allowed the company to apply for funding of R100 million under the Covid-19 loan guarantee scheme put in place by the SA Reserve Bank and large commercial banks at the time.

Due to Covid-19 Adjusted Level 4 Lockdown restrictions imposed by government for leisure travel to and from Gauteng from the end of June 2021 to the end of July 2021 and Comair suspending flights from 5 July 2021, the company did not generate any revenue during that period. It recommenced flights on on 1 September 2021 but still required funding. It then sold its Slow Lounge airport lounge business to FirstRand for R250 million.

All affected parties have until 26 July to provide the court with reasons why the provisional liquidation order should not be made a final order.