February 7, 2023


Do The business

How not to run an airline (Comair edition)


Just 24 hours just before saying its final decision – on Tuesday evening – to “voluntarily suspend” all Kulula and British Airways regional flights from Wednesday (June 1), Comair ran a sale across its own distribution channels which promised up to 30% off flights (it ran a sale via selected journey brokers on May possibly 25).

At this place, definitely the directors of the team knew that in the absence of funding the airline was about to strike the wall?

Is this not absolutely unconscionable?

On April 26, it did precisely the exact detail (with up to 30% off flights).

Recognize a sample at thirty day period-conclude?

Just one may possibly issue whether the administrators should to be charged with reckless trading – this is not much off the shenanigans Mango pulled in the course of its death throes (in the absence of a bottomless pit of condition funding). At least Comair did not ground its flights on the early morning since it owed ATNS/Acsa dollars, as Mango was forced to do.

It remains unclear who Comair’s existing lenders are.

Comair has operate out of dollars. But this is not new news.


As much back as January 31, the business enterprise rescue practitioners warned in their month to month report that the group essential “further funding”. They observed that it had misplaced close to R100 million in formerly booked but ‘unflown’ income, mainly due to the British isles travel ban in December as a consequence of the Omicron variant of Covid-19. The majority of this is inbound British Airways profits.

But, the directors would’ve recognized this 6 months back – in December – currently. The need for funding has been talked about in each and every month to month report from the small business rescue practitioners since that date.

In March, it verified in detail to Moneyweb that it “has been in an ongoing procedure of restructuring its stability sheet from both equally a debt and equity point of view considering that the starting of the 12 months, which has concerned ongoing engagement with Comair’s traders and loan providers to make certain that the correct variety and quantum of funding is raised”.

Admittedly, this was prior to the compelled grounding of the Comair fleet, which flies around 40% of the current market, by the Civil Aviation Authority (CAA) for 4 times in March due to the fact of safety problems.


The business enterprise rescue practitioners reported at the conclude of March that: “Although the financial impression of this suspension was severe, it has not resulted in a improve to the Company’s present funding specifications.” So though the airline was forcibly grounded, it didn’t make things much better or even worse.

It will get stranger …

The inexplicable pity get together mea culpa in very last week’s Economical Mail, no question penned by Comair’s PR handlers, could not have been worse-timed. In the ‘opinion’ piece, CEO Glenn Orsmond explained, pertaining to its failures throughout the grounding, that: “We should really have communicated much more evidently and engaged instantly with the media. We dropped the ball, and we will not repeat the miscalculation.”

This was a whole-site apology … peculiar timing for an airline probably 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 built for painful studying, but the journal was appropriate: airlines count on the have faith in of their travellers, and this is as substantially about open up and crystal clear communications as it is about sustaining a spotless safety file.”

‘Orsmond’ noted it was “gratifying to observe that each day profits straight away reverted to the regular pre-suspension concentrations when the CAA gave us the all-clear”.

“This is an indicator of the power of our two airline makes, and our loyal client foundation.”

A cynic could argue that this was only as a final result of provide getting reduce than pre-Covid with a sector demanding a great deal of seats, particularly following Mango’s failure.

The term trust is doing a whole lot of get the job done in Orsmond’s letter. Airways rely solely on believe in. Nonetheless, by some means Comair penned this tone-deaf “opinion” a 7 days in advance of it “voluntarily” grounded its fleet.

We really do not know the actual circumstances of the negotiations amongst Comair (its really mysterious ‘rescue consortium’) and its loan providers and funders. Evidently these talks have not yielded effects.

And it is not crystal clear why funders and loan providers will quickly, in the next number of days, supply funding for the ailing airline (which, bear in mind, has publicly demanded funding since January). Loan providers and funders will have recognized of these necessities from December by now.

This is poor.

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

He highlighted that it doesn’t “have far more facts at this phase concerning the resumption of [Comair’s] flights”.

Possibly additional ominously, the letter says that: “While Comair’s own internal refund and credit rating processes nonetheless apply for all other affected customers, we are doing the job on choice booking and refund solutions for all Vitality customers to be declared prior to the stop of June.” [emphasis Moneyweb’s]

Discovery Vitality delivered R100 million in funding to Comair in pre-payment for tickets booked as aspect of the rescue process.

FNB’s eBucks, historically tied to Comair, hedged its bets a range of many years in the past by featuring special discounts to rewards shoppers throughout a variety of airlines outside of Kulula and British Airways.

Discovery released its Vitality Travel platform for Discovery Financial institution shoppers previously this year in an exertion to derisk the exposure to Comair to supply buyers with discounts across a range of airways.

This perceived reduction of assurance from its one most important husband or wife, Vitality, are unable to be beneficial.

Appropriate now, whilst the range of inbound travellers through British Airways will be constrained since of the time, executives at the British isles airline will undoubtedly be pondering regardless of whether or not they can have confidence in Comair to continue to fly inbound travellers (from BA) less than licence.

The licence is extremely beneficial and is the basis of the whole organization rescue strategy …

A tale for a different day.


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