Comair’s wings permanently clipped, after failing to secure additional funding

Comair has been grounded for good after its business rescue practitioners (BRPs) could not raise the necessary funding to continue with operations.

Comair, which operates Kulula.com and British Airways, suspended flights from 1 June until further notice as its BRPs tried to secure further funding.

The BRPs, in a notice published on Thursday, told creditors there was no reasonable prospect the company could be rescued.

Comair notice by Gareth Cotterell on Scribd

A letter circulated to employees and affected persons by Comair’s business rescue practitioners suggests that last week’s grounding was its curtain call.

In the correspondence seen by The Citizen, the business rescue practitioners said that it is no longer of the view that Comair and its Kulula and British Airways brands are salvageable. It reads: “…the company’s joint business rescue practitioners give notice herewith that they no longer believe that there is a reasonable prospect that the Company can be rescued.”

ALSO READ:  Comair suspends British Airways & Kulula flights until further notice

The letter further stated that efforts to raise funding did not bear fruit. Comair said it had no option but proceed with the liquidation application.  

“We did our utmost to secure the funding, but when we were unable to do so we had no option but to lodge the application. It is an extremely sad day for the company, its employees, its customers and South African aviation.”

Covid-19 blamed

The company also blames Covid-19, the red-listing of South Africa by other countries during the pandemic and the temporary suspension of its license by civil aviation. It added that the high fuel price added to the burden,

Comair said: “Each of these events had a material negative impact on the business.”

Ticket refunds

Customers of Comair who were seduced by Kulula’s fire sale hours before ceasing operations will now have to queue for their refunds along with the list of creditors. The airline has never exited business rescue and creditors and ticket holders will likely get even less of a dividend on their rand.

Despite denials by Comair, aviation expert Phuthego Mojapele told The Citizen on Thursday that the company’s quick-cash tactics were tantamount to criminal.

He said: “There was no way that Comair’s executive couldn’t have known its dire financial position prior to going on sale to get money in. Instead, it was easier to mislead consumers and, when they realised that not enough money was raised that way, to ground the airline a few hours later.”

Thousands of BA and Kulula ticket holders were stranded or left without travel plans, many felt scammed and vented on social media.

Comair did promise refunds and luckily for British Airways passengers, they are protected through the franchisor, BA in the United Kingdom. Funds are only released to Comair once a British Airways ticketed passenger has flown. Kulula passengers are ticketed differently, and wholly dependent on Comair for their refunds. If Comair is liquidated, they’ll stand in line with everyone else waiting for a slice of whatever is left.

Comair previously told consumer journalist Wendy Knowler that everyone’s money was safe and published different refund application procedures for each brand.

Comair’s pending liquidation negated that promise.

Last year an internal Comair survey by Solidarity already showed some cracks in the organisation. Staff were dissatisfied, had no confidence in the company’s leadership or in chief executive Glen Orsmond. The environment was described as toxic.

The grounding leaves uncertainty for the over 1,200 workers employed by Comair.