Kulula airline's parent company says the Covid-19 lockdown has completely eroded its revenue base.
JSE-listed airline company Comair on Tuesday announced the group will be placed under business rescue after the Covid-19 crisis disrupted the implementation of a turnaround plan.
Comair CEO Wrenelle Stander said the unprecedented situation following the Covid-19 lockdown had completely eroded the company’s revenue base “while we are still obliged to meet fixed overhead costs. The only responsible decision is to apply for business rescue."
On March 23, the airline company, which owns low-cost airline Kulula, announced that it would be embarking on a facilitated Section 189 retrenchment process. This was three days before the national lockdown became effective, from which time Comair has not operated any passenger services since.
“Comair remains solvent and an important contributor to the South African economy. This is a necessary process to ensure a focussed restructuring of the company takes place as quickly as possible so we can take to the skies again as a sustainable business and play our part in the county’s airline industry," said the CEO
The Covid-19 crisis has also severely affected the global airline industry with a number of carriers going out of businesses. Others such as Virgin Australia and Air Mauritius have implemented restructuring processes similar to business rescue. Meanwhile, South African Airways has been facing challenges of its own.
Comair was granted approval to suspend the trading of its shares on the JSE with immediate effect.