October 4, 2022


The business spirit

How not to run an airline (Comair edition)

How not to run an airline (Comair edition)


Just 24 several hours before announcing its selection – on Tuesday night – to “voluntarily suspend” all Kulula and British Airways regional flights from Wednesday (June 1), Comair ran a sale across its individual distribution channels which promised up to 30% off flights (it ran a sale by using sure vacation brokers on May well 25).

At this level, undoubtedly the administrators of the team realized that in the absence of funding the airline was about to hit the wall?

Is this not absolutely unconscionable?

On April 26, it did just the very same factor (with up to 30% off flights).

Discover a sample at month-finish?

One may well question irrespective of whether the directors ought to be charged with reckless trading – this is not significantly off the shenanigans Mango pulled during its loss of life throes (in the absence of a bottomless pit of condition funding). At the very least Comair didn’t ground its flights on the morning mainly because it owed ATNS/Acsa revenue, as Mango was compelled to do.

It stays unclear who Comair’s recent creditors are.

Comair has run out of money. But this is not new news.


As far again as January 31, the enterprise rescue practitioners warned in their regular report that the group essential “further funding”. They noted that it had dropped somewhere around R100 million in beforehand booked but ‘unflown’ revenue, mostly thanks to the British isles vacation ban in December as a final result of the Omicron variant of Covid-19. The the greater part of this is inbound British Airways earnings.

Still, the directors would’ve known this 6 months in the past – in December – now. The want for funding has been talked about in each individual regular report from the small business rescue practitioners given that that date.

In March, it verified in element to Moneyweb that it “has been in an ongoing system of restructuring its stability sheet from both equally a financial debt and equity point of view because the starting of the yr, which has associated ongoing engagement with Comair’s investors and loan providers to guarantee that the appropriate type and quantum of funding is raised”.

Admittedly, this was just before the compelled grounding of the Comair fleet, which flies about 40% of the sector, by the Civil Aviation Authority (CAA) for 4 times in March because of security problems.


The business enterprise rescue practitioners said at the end of March that: “Although the economic affect of this suspension was significant, it has not resulted in a improve to the Company’s present funding necessities.” So although the airline was forcibly grounded, it didn’t make issues far better or worse.

It gets stranger …

The inexplicable pity celebration mea culpa in last week’s Financial Mail, no doubt penned by Comair’s PR handlers, could not have been even worse-timed. In the ‘opinion’ piece, CEO Glenn Orsmond explained, concerning its failures throughout the grounding, that: “We need to have communicated extra clearly and engaged instantly with the media. We dropped the ball, and we will not repeat the slip-up.”

This was a whole-web site apology … weird timing for an airline likely about to strike the wall.

In the piece, Orsmond (/his handlers) wrote: “The FM penned a scathing critique of Comair in March … right after our flights had been briefly suspended by the SA Civil Aviation Authority [CAA]. It designed for distressing looking at, but the magazine was right: airways count on the believe in of their passengers, and this is as considerably about open and apparent communications as it is about maintaining a spotless protection file.”

‘Orsmond’ noted it was “gratifying to notice that daily revenue immediately reverted to the regular pre-suspension levels when the CAA gave us the all-clear”.

“This is an indicator of the power of our two airline manufacturers, and our faithful customer base.”

A cynic may perhaps argue that this was just as a end result of offer getting decreased than pre-Covid with a market demanding a great deal of seats, particularly immediately after Mango’s failure.

The word have faith in is carrying out a ton of function in Orsmond’s letter. Airways rely completely on belief. However, somehow Comair penned this tone-deaf “opinion” a 7 days before it “voluntarily” grounded its fleet.

We really don’t know the correct situations of the negotiations concerning Comair (its incredibly mysterious ‘rescue consortium’) and its creditors and funders. Evidently these talks have not yielded outcomes.

And it is not obvious why funders and loan companies will quickly, in the following number of times, give funding for the ailing airline (which, recall, has publicly needed funding since January). Loan providers and funders will have regarded of these demands from December now.

This is terrible.

Discovery Vitality CEO Dinesh Govender stated in a letter to buyers on Wednesday that for flights booked between June 1 and June 7, “Discovery Bank will instantly refund the total [customers] put in on that flight into their Discovery Financial institution account by the stop of business today”.

He highlighted that it doesn’t “have a lot more facts at this stage relating to the resumption of [Comair’s] flights”.

Maybe a lot more ominously, the letter suggests that: “While Comair’s possess interior refund and credit procedures however apply for all other affected users, we are doing work on choice scheduling and refund options for all Vitality members to be introduced in advance of the conclusion of June.” [emphasis Moneyweb’s]

Discovery Vitality furnished R100 million in funding to Comair in pre-payment for tickets booked as section of the rescue procedure.

FNB’s eBucks, historically tied to Comair, hedged its bets a amount of yrs back by giving special discounts to rewards prospects throughout a quantity of airways outside of Kulula and British Airways.

Discovery launched its Vitality Vacation system for Discovery Bank customers previously this yr in an exertion to derisk the publicity to Comair to supply buyers with special discounts throughout a number of airlines.

This perceived decline of self esteem from its solitary biggest associate, Vitality, are not able to be good.

Suitable now, though the variety of inbound travellers by using British Airways will be minimal for the reason that of the season, executives at the Uk airline will surely be asking yourself irrespective of whether or not they can believe in Comair to continue to fly inbound passengers (from BA) less than licence.

The licence is extremely rewarding and is the foundation of the full small business rescue prepare …

A story for one more working day.


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