Comair hopes to up R1.1bn SAA damages award

Comair CEO Erik Venter has disclosed that its R1.16 billion damages award against SAA might increase by R700 million, should a court appeal succeed.

Venter spoke to Moneyweb at an event showcasing the Comair Training Centre (CTC) in Kempton Park where the airline’s own pilots as well as those of 32 other airlines and the South African and Indian air forces are trained.

In terms of a High Court ruling handed down in February last year, SAA has to pay Comair damages to the amount of R1.16 billion for anticompetitive conduct between 1999 and 2005.

SAA earlier paid R104 million damages to Nationwide on the basis of the same events, but decided to appeal the amount awarded to Comair. The court in both cases only dealt with the amount of damages, since the Competition Tribunal earlier ruled on the merits.

Venter said SAA’s appeal was most probably a delaying tactic. “We would have been satisfied with the R1.1 billion, although it’s R700 million less than what we claimed.” He said that when SAA appealed, Comair decided to cross-appeal in an effort to pursue the R700 million balance as well.

Both parties got leave to appeal and are awaiting a court date.

National Treasury recently had to step in and pay R2.2 billion to one of SAA’s creditors that refused to extend the term of its loan to SAA when it became due. SAA has R19 billion worth of government guarantees and it is said to make a R370 million loss every month.

Comair earlier challenged government’s ever-increasing guarantees to SAA in court but without success. Venter said on Wednesday that the government, at that stage, argued that the guarantees were not in reality an expense to the fiscus. It is “merely paper”, so to speak.

When Treasury had to intervene with the R2.2 billion payment, this changed fundamentally, he said. Government used cash to prop up SAA and that is money that could have been used for building houses, schools and so forth.

Asked how long SAA can continue operating, he said: “As long as government keeps on giving the money.”

Venter said the current aviation market is tough, but cost cutting and diversification has paid off for Comair.

When Comair about 15 years ago started to do its own pilot training, it was aimed at saving the cost of sending staff abroad for training. Initially it was a cost centre, but the airline expanded the centre and is currently providing training to more than 32 airlines, the South African Air Force and the Indian Air Force.

“The facility operates four flight simulators for various configurations of Boeing 737, the best-selling commercial jet airliner in history. We’ve built a client base of airlines from African countries, as well as the Middle East, South America, Indo-Asia and the Far East, offering advanced pilot training for both airline operators and private clients,” Venter says.

Training is specific to the 737 series aircraft, while classroom training non-specific to the 737 series is also provided at the centre. This includes crew resource management courses as well as command evaluation and upgrade training.

Comair has also set up a retired Boeing 737 for cabin crew training, providing a realistic environment for safety and evacuation training. The aircraft is equipped with bulkheads and stowages, smoke simulators, communication systems, passenger and crew seats, doors and slides, galleys and a flight deck.

To see how this retired aircraft was moved over the highway to its current location, watch the video below:

The CTC diversification model has been followed with regard to Comair’s airline catering unit Food Directions and its Slow Lounge concept.

Venter said the prospects for the CTC are good. Boeing’s recent Current Market Outlook (CMO) report has found that air traffic for Africa’s carriers is forecast to grow at nearly 6% annually over the next 20 years, which is above the world average, he said. It is driven by economic growth on the continent and by increasing numbers of travellers from and within the region.

Boeing projects that the aviation sector in Africa will need 20 000 new pilots, 24 000 new technicians and 26 000 new cabin crew by 2035. This reflects a global demand for 617 000 new pilots, 679 000 new technicians and 814 000 new cabin crew for the same period.

Watch: Moneyweb journalist “takes control” of the Boeing 737-800

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