Comair sells SLOW Lounge to FirstRand for US$17.7m in business rescue process

SOUTH AFRICA – Comair, which owns low-cost airline kulula.com and operates British Airways domestically in South Africa under a license agreement, has sold its SLOW Lounge business to FirstRand Bank for R250 million (US$17.6 million), another milestone in the business rescue process.

The SLOW Lounge transaction would require an amendment to the business rescue plan, a notice of which has been despatched to affected persons.

It said this also followed the sale of Comair’s and receipt of a R20 million (US$1.4 million) payment from South African Airways (SAA).

“The R20 million (US$1.4 million) distribution from SAA’s business rescue practitioners is part of the R1.1 billion (US$77.5 million) the state-owned enterprise owed Comair in settlement a damages award for anti-competitive behavior. SAA paid an initial amount of R289 million (US$20.4 million) in February 2019, with the balance payable in installments until July 2022. These payments ceased when SAA entered business rescue in December 2019,” it said.

Comair went into business rescue in May 2020.

The Comair Rescue Consortium, comprising several former Comair board members and executives, was chosen as the preferred bidder.

The business rescue practitioners are convening a virtual meeting with creditors on 21 September 2021 to vote on amending the company’s business rescue plan – adopted in September 2020 – to approve the SLOW Lounge sale.

The rescue practitioners say in their notice to creditors dated 31 August 2021 that, because of the Covid-19 adjusted level 4 lockdown restrictions, leisure travel to and from Gauteng was prohibited from 27 June 2021 to 26 July 2021 and, consequently, Comair had to suspend scheduled flight operations as from 5 July 2021.

During the suspension, its revenue management team has been working on some new, flexible fare options to better meet customers’ differing requirements.

Called Travel Your Way, the three-bundled affordable kulula.com fare offerings allow customers to pay only for what they need.

British Airways – operated by Comair – will relaunch its Johannesburg-Mauritius route operating two flights a week from 30 November 2021.

It plans to add a third flight in the future.

Richard Ferguson, one of Comair’s business rescue practitioners, said the capital injection was a significant step towards the successful conclusion of the business rescue process.

“There is still work to be done but these capital inflows, the fact that Comair is back in the skies and again earning revenue coupled with the commitment by the investors to support the viability and sustainability of the business, all point to a positive outcome.”

 

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