Comair closes while Mango received money

After 75 years of operations in South Africa, Comair is to go into liquidation. The carrier, which also ran the British Airways franchise in South Africa, started operations in 1948 as a chartered service between Johannesburg and Durban, and later ferried Anglo American’s employees between gold mines. It entered commercial service in 1992.

The airlines business rescue practitioners on 9 June lodged a court application to convert the business rescue proceedings into liquidation proceedings. Comair has faced a number of events that have had devastating results. The world-wide lockdown of air travel as a result of the COVID pandemic, followed by yet more restrictions, suspension of its AOC in March and now the extremely high fuel prices. The financial impact was severe.

One of the BRPs, Richard Ferguson, says with its two airline brands – British Airways (operated by Comair and kulula.com), market share, modern aircraft fleet, experienced employees, sales and distributions channels Comair was an inherently viable business. Unfortunately, though, despite their best efforts the BRPs had been unable to secure the capital required for the airline to recommence operations.

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

Ferguson said that the company’s employees and customers who held bookings or were owed refunds will now become creditors of the Company.

Meanwhile….

Mango has received R225 million as part of outstanding state aid after the administrator of the state-owned budget carrier threatened to take the South African government to court. The airline was allocated R819 million from a R10.5 billion state bailout granted to SAA. The funding was to help cover its debt and pay for its restructuring.

In his latest report to creditors, Mango administrator Sipho Sono confirmed he has dropped an urgent application in the Gauteng High Court against Mango’s shareholder representative Department of Public Enterprises and SAA following the transfer of the money. He has advised creditors not to pursue further legal action for the settlement of the remaining R85 million as the outcome would be unpredictable!

Meantime, the investor process is progressing according to the time frame agreed with the as-yet-unnamed preferred bidder. The so far unspecified purchase offer to be deposited before the end of June 2022.

“In the event that the preferred bidder is unable to fulfil the conditions of the transaction agreements, the reserve bidder will be approached to conclude the transaction,” Sono said.

If the transaction cannot be finalised, the wind-down plan incorporated in Mango’s business rescue plan will have to go ahead. Still, he believes that “there is a reasonable prospect of rescuing the company”.

SAA’s failure to transfer the funds resulted in Sono, on 10 May, filing an application in the Gauteng High Court for the release of the funds. In a meeting with Public Enterprises Minister Pravin Gordhan on the same day, according to Sono, Gordhan said there was a need to redirect some of the allocation to other pressing government needs.