How not to run an airline (Comair edition)

How not to run an airline (Comair edition)


Just 24 hrs ahead of asserting its choice – on Tuesday evening – to “voluntarily suspend” all Kulula and British Airways regional flights from Wednesday (June 1), Comair ran a sale throughout its very own distribution channels which promised up to 30% off flights (it ran a sale via certain travel brokers on May perhaps 25).

At this point, certainly the administrators of the group knew that in the absence of funding the airline was about to strike the wall?

Is this not entirely unconscionable?

On April 26, it did accurately the same thing (with up to 30% off flights).

Discover a pattern at thirty day period-close?

A person may dilemma whether or not the directors should to be charged with reckless buying and selling – this is not considerably off the shenanigans Mango pulled during its loss of life throes (in the absence of a bottomless pit of state funding). At minimum Comair didn’t ground its flights on the early morning simply because it owed ATNS/Acsa funds, as Mango was forced to do.

It remains unclear who Comair’s latest collectors are.

Comair has operate out of dollars. But this is not new information.


As significantly again as January 31, the organization rescue practitioners warned in their regular report that the team demanded “further funding”. They noted that it experienced lost about R100 million in formerly booked but ‘unflown’ earnings, mostly due to the United kingdom vacation ban in December as a consequence of the Omicron variant of Covid-19. The the vast majority of this is inbound British Airways revenue.

Yet, the administrators would’ve acknowledged this 6 months back – in December – presently. The require for funding has been described in every single month to month report from the small business rescue practitioners considering that that date.

In March, it verified in depth to Moneyweb that it “has been in an ongoing procedure of restructuring its stability sheet from both of those a personal debt and fairness standpoint since the commencing of the calendar year, which has associated ongoing engagement with Comair’s investors and lenders to assure that the appropriate kind and quantum of funding is raised”.

Admittedly, this was ahead of the pressured grounding of the Comair fleet, which flies roughly 40% of the current market, by the Civil Aviation Authority (CAA) for four times in March for the reason that of basic safety concerns.


The small business rescue practitioners reported at the close of March that: “Although the economic impression of this suspension was significant, it has not resulted in a adjust to the Company’s present funding specifications.” So although the airline was forcibly grounded, it didn’t make issues superior or even worse.

It will get stranger …

The inexplicable pity celebration mea culpa in last week’s Monetary Mail, no doubt penned by Comair’s PR handlers, could not have been even worse-timed. In the ‘opinion’ piece, CEO Glenn Orsmond stated, about its failures in the course of the grounding, that: “We really should have communicated far more obviously and engaged immediately with the media. We dropped the ball, and we will not repeat the slip-up.”

This was a full-webpage apology … strange timing for an airline most likely about to strike the wall.

In the piece, Orsmond (/his handlers) wrote: “The FM penned a scathing critique of Comair in March … right after our flights had been briefly suspended by the SA Civil Aviation Authority [CAA]. It made for distressing reading, but the magazine was ideal: airways count on the believe in of their passengers, and this is as substantially about open up and distinct communications as it is about sustaining a spotless basic safety file.”

‘Orsmond’ observed it was “gratifying to take note that day-to-day sales right away reverted to the regular pre-suspension stages when the CAA gave us the all-clear”.

“This is an indicator of the strength of our two airline manufacturers, and our loyal purchaser base.”

A cynic might argue that this was basically as a consequence of supply getting reduced than pre-Covid with a current market demanding a large amount of seats, specially immediately after Mango’s failure.

The phrase have confidence in is undertaking a great deal of do the job in Orsmond’s letter. Airways count solely on have faith in. Nonetheless, by some means Comair penned this tone-deaf “opinion” a 7 days prior to it “voluntarily” grounded its fleet.

We don’t know the actual situation of the negotiations concerning Comair (its quite mysterious ‘rescue consortium’) and its loan companies and funders. Evidently these talks have not yielded benefits.

And it is not very clear why funders and lenders will quickly, in the following few times, offer funding for the ailing airline (which, keep in mind, has publicly necessary funding considering that January). Lenders and funders will have identified of these needs from December already.

This is poor.

Discovery Vitality CEO Dinesh Govender reported in a letter to clients on Wednesday that for flights booked involving June 1 and June 7, “Discovery Lender will quickly refund the sum [customers] expended on that flight into their Discovery Bank account by the finish of organization today”.

He highlighted that it does not “have much more info at this stage pertaining to the resumption of [Comair’s] flights”.

Maybe far more ominously, the letter states that: “While Comair’s very own inner refund and credit rating processes even now apply for all other influenced customers, we are operating on alternate scheduling and refund solutions for all Vitality customers to be declared right before the conclude of June.” [emphasis Moneyweb’s]

Discovery Vitality delivered R100 million in funding to Comair in pre-payment for tickets booked as element of the rescue approach.

FNB’s eBucks, traditionally tied to Comair, hedged its bets a selection of a long time back by offering bargains to benefits prospects throughout a number of airlines beyond Kulula and British Airways.

Discovery launched its Vitality Journey system for Discovery Bank shoppers earlier this yr in an work to derisk the publicity to Comair to give clients with discounts throughout a selection of airlines.

This perceived reduction of confidence from its solitary major spouse, Vitality, simply cannot be good.

Correct now, though the variety of inbound travellers by using British Airways will be confined since of the season, executives at the Uk airline will undoubtedly be thinking no matter if or not they can trust Comair to proceed to fly inbound travellers (from BA) below licence.

The licence is exceptionally lucrative and is the basis of the total small business rescue program …

A tale for a further working day.


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