Home News How to not run an airline (Comair version)

How to not run an airline (Comair version)

How to not run an airline (Comair version)

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Simply 24 hours earlier than saying its choice – on Tuesday night time – to “voluntarily droop” all Kulula and British Airways regional flights from Wednesday (June 1), Comair ran a sale throughout its personal distribution channels which promised as much as 30% off flights (it ran a sale by way of sure journey brokers on Could 25).

At this level, certainly the administrators of the group knew that within the absence of funding the airline was about to hit the wall?

Is that this not utterly unconscionable?

On April 26, it did precisely the identical factor (with as much as 30% off flights).

Discover a sample at month-end?

One would possibly query whether or not the administrators must be charged with reckless buying and selling – this isn’t far off the shenanigans Mango pulled throughout its loss of life throes (within the absence of a bottomless pit of state funding). At the least Comair didn’t floor its flights on the morning as a result of it owed ATNS/Acsa cash, as Mango was compelled to do.

It stays unclear who Comair’s present collectors are.

Comair has run out of cash. However this isn’t new information.


Way back to January 31, the enterprise rescue practitioners warned of their month-to-month report that the group required “additional funding”. They famous that it had misplaced roughly R100 million in beforehand booked however ‘unflown’ income, primarily as a result of UK journey ban in December on account of the Omicron variant of Covid-19. The vast majority of that is inbound British Airways income.

But, the administrators would’ve recognized this six months in the past – in December – already. The necessity for funding has been talked about in each month-to-month report from the enterprise rescue practitioners since that date.

In March, it confirmed intimately to Moneyweb that it “has been in an ongoing strategy of restructuring its stability sheet from each a debt and fairness perspective because the starting of the yr, which has concerned ongoing engagement with Comair’s traders and lenders to make sure that the suitable kind and quantum of funding is raised”.

Admittedly, this was earlier than the compelled grounding of the Comair fleet, which flies roughly 40% of the market, by the Civil Aviation Authority (CAA) for 4 days in March due to security considerations.


The enterprise rescue practitioners stated on the finish of March that: “Though the monetary affect of this suspension was extreme, it has not resulted in a change to the Firm’s current funding necessities.” So whereas the airline was forcibly grounded, it didn’t make issues higher or worse.

It will get stranger …

The inexplicable pity social gathering mea culpa in final week’s Monetary Mail, little doubt penned by Comair’s PR handlers, couldn’t have been worse-timed. Within the ‘opinion’ piece, CEO Glenn Orsmond stated, relating to its failures throughout the grounding, that: “We should always have communicated extra clearly and engaged straight with the media. We dropped the ball, and we won’t repeat the error.”

This was a full-page apology … unusual timing for an airline probably about to hit the wall.

Within the piece, Orsmond (/his handlers) wrote: “The FM penned a scathing critique of Comair in March … after our flights had been quickly suspended by the SA Civil Aviation Authority [CAA]. It made for painful studying, however the journal was proper: airways rely upon the belief of their passengers, and that is as a lot about open and clear communications as it’s about sustaining a spotless security report.”

‘Orsmond’ famous it was “gratifying to notice that each day gross sales instantly reverted to the traditional pre-suspension ranges as soon as the CAA gave us the all-clear”.

“That is an indicator of the energy of our two airline manufacturers, and our loyal buyer base.”

A cynic could argue that this was merely on account of provide being decrease than pre-Covid with a market demanding plenty of seats, particularly after Mango’s failure.

The phrase belief is doing plenty of work in Orsmond’s letter. Airways rely completely on belief. But, in some way Comair penned this tone-deaf “opinion” per week earlier than it “voluntarily” grounded its fleet.

We don’t know the precise circumstances of the negotiations between Comair (its very mysterious ‘rescue consortium’) and its lenders and funders. Evidently these talks haven’t yielded outcomes.

And it isn’t clear why funders and lenders will all of the sudden, within the subsequent few days, present funding for the ailing airline (which, keep in mind, has publicly required funding since January). Lenders and funders could have recognized of those necessities from December already.

That is unhealthy.

Discovery Vitality CEO Dinesh Govender stated in a letter to prospects on Wednesday that for flights booked between June 1 and June 7, “Discovery Financial institution will routinely refund the quantity [customers] spent on that flight into their Discovery Checking account by the tip of enterprise at the moment”.

He highlighted that it doesn’t “have extra data at this stage relating to the resumption of [Comair’s] flights”.

Maybe extra ominously, the letter says that: “Whereas Comair’s personal inner refund and credit score processes nonetheless apply for all different affected members, we’re engaged on various reserving and refund options for all Vitality members to be introduced earlier than the tip of June.” [emphasis Moneyweb’s]

Discovery Vitality supplied R100 million in funding to Comair in pre-payment for tickets booked as a part of the rescue course of.

FNB’s eBucks, traditionally tied to Comair, hedged its bets a variety of years in the past by providing reductions to rewards prospects throughout a variety of airways past Kulula and British Airways.

Discovery launched its Vitality Journey platform for Discovery Financial institution prospects earlier this yr in an effort to derisk the publicity to Comair to offer prospects with reductions throughout a variety of airways.

This perceived lack of confidence from its single greatest associate, Vitality, can’t be optimistic.

Proper now, whereas the variety of inbound travellers by way of British Airways shall be restricted due to the season, executives on the UK airline will certainly be questioning whether or not or not they’ll belief Comair to proceed to fly inbound passengers (from BA) beneath licence.

The licence is extremely profitable and is the premise of all the enterprise rescue plan …

A narrative for one more day.

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