How not to run an airline (Comair edition)

Just 24 hours in advance of saying its conclusion – on Tuesday night time – to “voluntarily suspend” all Kulula and British Airways regional flights from Wednesday (June 1), Comair ran a sale across its possess distribution channels which promised up to 30% off flights (it ran a sale via specified vacation brokers on Could 25).

At this point, undoubtedly the administrators of the team understood that in the absence of funding the airline was about to hit the wall?

Is this not entirely unconscionable?

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

Recognize a pattern at month-finish?

1 may problem whether or not the administrators should to be billed with reckless buying and selling – this is not much off the shenanigans Mango pulled through its dying throes (in the absence of a bottomless pit of point out funding). At least Comair didn’t floor its flights on the early morning since it owed ATNS/Acsa dollars, as Mango was compelled to do.

It remains unclear who Comair’s latest creditors are.

Comair has run out of money. But this is not new news.


As far back as January 31, the business rescue practitioners warned in their monthly report that the group expected “further funding”. They famous that it experienced dropped about R100 million in earlier booked but ‘unflown’ income, primarily thanks to the United kingdom vacation ban in December as a result of the Omicron variant of Covid-19. The the vast majority of this is inbound British Airways income.

Yet, the administrators would’ve recognized this 6 months back – in December – presently. The require for funding has been outlined in each monthly report from the business rescue practitioners due to the fact that date.

In March, it confirmed in detail to Moneyweb that it “has been in an ongoing method of restructuring its harmony sheet from each a credit card debt and fairness standpoint since the starting of the calendar year, which has involved ongoing engagement with Comair’s investors and creditors to make certain that the appropriate style and quantum of funding is raised”.

Admittedly, this was prior to the compelled grounding of the Comair fleet, which flies around 40% of the sector, by the Civil Aviation Authority (CAA) for 4 days in March for the reason that of protection worries.


The business rescue practitioners mentioned at the end of March that: “Although the economic impact of this suspension was intense, it has not resulted in a alter to the Company’s existing funding requirements.” So although the airline was forcibly grounded, it didn’t make matters much better or even worse.

It will get stranger …

The inexplicable pity occasion mea culpa in very last week’s Fiscal Mail, no doubt penned by Comair’s PR handlers, could not have been worse-timed. In the ‘opinion’ piece, CEO Glenn Orsmond explained, regarding its failures throughout the grounding, that: “We need to have communicated extra clearly and engaged directly with the media. We dropped the ball, and we will not repeat the slip-up.”

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

In the piece, Orsmond (/his handlers) wrote: “The FM penned a scathing critique of Comair in March … right after our flights were quickly suspended by the SA Civil Aviation Authority [CAA]. It manufactured for distressing examining, but the magazine was proper: airlines depend on the have confidence in of their passengers, and this is as a great deal about open and very clear communications as it is about keeping a spotless safety history.”

‘Orsmond’ mentioned it was “gratifying to notice that each day product sales immediately reverted to the ordinary pre-suspension amounts after the CAA gave us the all-clear”.

“This is an indicator of the toughness of our two airline manufacturers, and our loyal client foundation.”

A cynic might argue that this was simply as a result of offer being decrease than pre-Covid with a sector demanding a good deal of seats, especially soon after Mango’s failure.

The phrase rely on is undertaking a great deal of get the job done in Orsmond’s letter. Airlines depend solely on have confidence in. But, in some way Comair penned this tone-deaf “opinion” a week ahead of it “voluntarily” grounded its fleet.

We really do not know the actual conditions of the negotiations between Comair (its incredibly mysterious ‘rescue consortium’) and its loan providers and funders. Evidently these talks have not yielded outcomes.

And it is not clear why funders and loan providers will instantly, in the up coming several days, give funding for the ailing airline (which, keep in mind, has publicly necessary funding considering the fact that January). Lenders and funders will have acknowledged of these requirements from December already.

This is negative.

Discovery Vitality CEO Dinesh Govender explained in a letter to shoppers on Wednesday that for flights booked among June 1 and June 7, “Discovery Financial institution will immediately refund the amount of money [customers] invested on that flight into their Discovery Lender account by the finish of business today”.

He highlighted that it does not “have extra details at this stage with regards to the resumption of [Comair’s] flights”.

Possibly more ominously, the letter says that: “While Comair’s personal internal refund and credit processes however use for all other impacted members, we are operating on option scheduling and refund methods for all Vitality users to be declared just before the stop of June.” [emphasis Moneyweb’s]

Discovery Vitality offered R100 million in funding to Comair in pre-payment for tickets booked as portion of the rescue system.

FNB’s eBucks, traditionally tied to Comair, hedged its bets a range of decades ago by offering reductions to benefits customers across a variety of airlines beyond Kulula and British Airways.

Discovery introduced its Vitality Travel system for Discovery Lender buyers earlier this year in an hard work to derisk the publicity to Comair to present clients with reductions throughout a number of airlines.

This perceived loss of confidence from its one largest lover, Vitality, cannot be optimistic.

Ideal now, whilst the selection of inbound travellers by means of British Airways will be restricted since of the time, executives at the United kingdom airline will undoubtedly be wanting to know no matter if or not they can belief Comair to continue on to fly inbound travellers (from BA) below licence.

The licence is unbelievably worthwhile and is the basis of the whole business rescue system …

A tale for another working day.