South Africa’s British Airways Comair has released the much-awaited Business Rescue Plan. The airline entered into voluntary administration in May 2020.
The publication of the business rescue plan comes after negotiations with a preferred investor which will inject equity worth R500 million in return for a 99% shareholding. Up to 15% of this shareholding will be allocated to a suitable black empowerment partner within a year.
Comair operates under the brand names British Airways and Kulula.com. British Airways is a full-service brand while Kulula operate as a low-cost airline within South Africa.
Business Rescue Plan
The airline requires a drastic turnaround to manage cost and grow other streams of revenue along the ancillary lines.
About 400 staff from the 2 200 employees are scheduled to be made redundant through a voluntary retrenchment and early retirement programmes. A board will be constituted and Comair will de-list from the Johannesburg Stock Exchange (JSE).
The fleet will comprise 20 aircraft of which 17 will be next-generation Boeing 737-800s and the remaining three Boeing 737-400s. This fleet mix increases the proportion of owned aircraft, which limits exposure to foreign currency risk.
The airline is planning to resume flights from 01 December 2020 as soon as the Company is sufficiently capitalised in terms of the Business Rescue Plan.
Richard Ferguson, one of the business rescue practitioners, says that if creditors approve the plan the business rescue process should be concluded by 31 March 2021, if not sooner, after which Comair will continue to operate as a sustainable business.
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