Comair has received a binding offer from preferred investors this week, putting the airline on track to resume services this year. The South African airline went into voluntary business rescue in May after seeing revenues disappear. The plan will go to a vote by the airline’s creditors next month, deciding the airline’s fate.
According to Business Maverick, a group of investors has come together as the Moritz Consortium to make an offer. The consortium is offering R500 million ($30.2 million) of capital to kickstart the airline.
Under the preferred investors, Comair will restart flights on 1st December, slightly later than anticipated. The airline will also delist from the Johannesburg Stock Exchange and bring in a new management team.
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There is one more bid for Comair, which plans to offer the airline R750 million ($45.3 million). The consortium, which includes investment firm Harith General Partners, and wants to restart flights as soon as October. However, both plans are subject to the creditor’s approval before they go into effect.
Creditors to vote soon
For the rescue plan to go into effect, 75% of the airline’s creditors will have to vote in favor of the plan. Creditors are set to meet on September 11th to vote on the Mortiz consortium bid, which would see two-tranche investment.
The first R100m will become available right after the creditors approve the plan, giving a much-needed cash injection. The rest of the R400m will be in the form of an equity purchase once the airline is delisted from the stock exchange. The other consortium is offering up to R750 million as soon as next week to recapitalize the airline.
The current fleet cuts will likely remain place, making Comair a much smaller airline than before the pandemic. The airline plans to cut 50% of its operational fleet when it starts flying again later this year.
With two bids now in, all eyes will be on the creditors meeting next month. If the rescue plan is accepted, the business rescue practitioners expect the process to wrap up by 31st March next year. However, failure of any plan to pass will see the airline enter liquidation.
Prior to its 2019 woes, Comair proudly boasted that it had been profitable for 72 years. The airline has a long history of reliable service and has shaken up the market with its low-cost arm, Kulula. However, pressures from the year before and the impact of 2020 left the airline scrambling.
Following a nationwide lockdown in March, Comair suspended all flights, and just over a month later it entered business rescue proceedings. The airline has seen its revenues disappear and could not cover its fixed costs for the coming months. However, with two strong rescue plans on the table, we have a good chance of seeing the airline back in the sky this year.
Have you flown with Comair before? Would you like to see the airline return? Let us know in the comment!