Comair passed another significant waypoint en route to returning to the skies when the vast majority of creditors and shareholders voted to adopt the business rescue plan last week.
In terms of the business rescue plan the preferred investment consortium, comprising a number of former Comair board members and executives, will invest fresh equity of R500 million in return for a 99% shareholding once the suspensive conditions set out in the business rescue plan have been met. Up to 15% of this will be allocated to a suitable BBBEEE partner within 12 months.
During the next two months R100 million of this will be paid in two equal tranches as secured post-commencement finance.
Additional funding from lenders of R1.4 billion is required and will comprise R600 million in new debt. The remaining R800 million will be deferred debt, with capital payments deferred for a year and interest for six months.
Comair will be de-listed from the JSE and a new board constituted.
The turnaround plan will focus on reducing operating costs and growing ancillary revenue.
The current workforce will be reduced from about 2,200 employees to 1,800 through voluntary retrenchment and early retirement programmes, as well as the Section 189 retrenchment process that began prior to business rescue continuing.
It is intended that the fleet be restored to 25 aircraft, including two Boeing Max aircraft. The aircraft will gradually return to service from December with a seven-month ramp-up period until June 2021.
Existing relationships will be maintained with British Airways, Discovery Vitality, Slow Lounges and Boeing.
Comair CEO, Wrenelle Stander, welcomed the adoption of the business rescue plan which should save 1,800 jobs. She says entering business rescue had been a difficult decision, particularly as good progress was being made to fix the financial situation, however, the extraordinary circumstances of the lockdown meant the company was unable to earn any revenue.
Richard Ferguson, one of the business rescue practitioners, says that a number of suspensive conditions in the plan must still be met. If this does not happen, then the company will be wound down in a structured manner to achieve the best return for creditors.
Glenn Orsmond, representing the Comair Rescue Consortium, says Comair plans to recommence air services in December with both the British Airways and kulula brands.
Should everything go according to plan the business rescue process should be concluded by 31 March 2021, after which Comair will continue to operate as a sustainable business.