South Africa’s Comair is in “a very difficult financial position” due to coronavirus-related travel restrictions and does not anticipate being able to resume flights until October or November, the carrier has disclosed.
In a 30 April cautionary announcement to shareholders, Comair writes: “Although the company was experiencing financial headwinds prior to the Covid-19 outbreak, the five-week lockdown has caused the situation to rapidly deteriorate to a point where the company finds itself in a very difficult financial position.”
It advises shareholders to “exercise caution when dealing in the company’s securities until a further announcement is made”.
Comair says it has been “unable to operate” since 17 March and none of its business divisions have generated any revenues. Citing the South African government’s plan to gradually ease lockdown restrictions, Comair says it does not expect to begin operating before October or November.
The airline – which operates flights as a British Airways franchise carrier and under the Kulula low-cost brand – has taken a number of actions aimed at mitigating the impact of the lockdown on its finances. These include initiating plans to reduce the number of executives and other staff, terminating its planned acquisition of aircraft leasing specialist Star Air Cargo, and beginning negotiations with banks over a possible convertible loan note issuance.
Comair incurred an operating loss of R562 million ($31 million) in the second half of 2019, which it attributed mainly to South African Airways’ having gone into business rescue, saying the flag carrier owed it R790 million. Operating expenses in the six months ended 31 December increased 13% to R3.6 billion as a result of “significantly higher fleet and maintenance costs” and the Boeing 737 Max grounding.