Note: This article has been updated since first published to confirm that Comair is to be liquidated.
British Airways’ franchise partner in South Africa, Comair, is to be liquidated.
Comair suspended all flights and ticket sales on 31 May 2022. At the time the company advised that it was securing new funds and would restart flights as soon as these were obtained.
Its Business Rescue Practitioners have issued a short statement, today Thursday 9 June, to advise “they no longer believe that there is a reasonable prospect that the Company can be rescued.”
Comair has subsequently issued a statement to confirm that liquidation proceedings have started.
Comair’s business rescue practitioners have today (9 June 2022) lodged a court application to convert the business rescue proceedings into liquidation proceedings.
One of the BRPs, Richard Ferguson, says 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. Unfortunately, though, despite their best efforts the BRPs had been unable to secure the capital required for the airline to recommence operations.
“We did our utmost to secure the funding, but when we were unable to do so had no option to lodge the application. It is an extremely sad day for the company, its employees, its customers and South African aviation.” After entering business rescue, Comair was able to start flying again when the Comair Rescue Consortium (CRC) invested R500m 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 unfortunately faced unforeseen headwinds including three further COVID-related air travel lockdowns inter alia the “Red Listing” of South Africa by certain European countries, notably the United Kingdom, the suspension of the Company’s AOC in March 2022 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. 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 31 May 2022.
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.
Ferguson said that the company’s employees and customers who held bookings or were owed refunds will now become creditors of the Company.
Comair entered into a Business Rescue Process in 2020 following the COVID-19 pandemic.
Its return to operations had been stymied by South Africa being placed on the UK’s “red list” in response to the Omicron COVID-19 variant.
The South African Civil Aviation Authority also temporarily suspended Comair’s operating licence in response to safety issues.
Guidance for BA Passengers
For all BA long haul passengers whose connecting flights on Comair are cancelled, BA has secured rebooking agreements with AirLink and South African Airways.
For passengers with standalone bookings with Comair, booked through BA, those due to travel up to 14 June can be rebooked onto other airlines.
Alternatively, you can apply for a refund. As can passengers due to travel after 15 June.
BA is likely to secure permanent codeshare partnerships in the medium term.
Comair was first founded as a charter airline in 1946. It became a BA franchise partner in the 1990s. Comair also operated under the name Kulula.
This was a time when BA saw franchising as a way the grow the airline and promote its brand around the world.
A number of franchisees were either sold or suspended flights. BA turned against franchising when terminated its last remaining UK franchise with Loganair, claiming they no longer served a purpose.
Comair, along with SUN-AIR, was the last remaining franchise.
BA had a shareholding in Comair. This was virtually wiped out when it entered Business Rescue. It was also owed around £2 million by Comair.
BA’s parent company IAG has shown no interest in investing in Comair. Indeed, BA and IAG have said very little during the entire business rescue process. The statement issued by BA on the suspension of flights had an air of finality about it.
The loss of Comair results in a substantial reduction in BA’s brand presence in an important long haul market for the airline.
It also leaves just one remaining franchise route, Manchester-Cambridge-Gothenburg, operated by SUN-AIR.