South African airline company offering domestic flights in SA as a British Airways franchisee, Comair, announced that it was restructuring in order to improve its efficiency and financial sustainability
According to a statement released by the airline, this follows the crisis facing the global airline industry as well as its H1 2020 interim results and recent difficult economic conditions.
“Today we initiated a Section 189 process in terms of the Labour Relations Act, to protect jobs and to ensure the sustainability of the Comair business,” said Comair CEO, Wrenelle Stander, in the statement.
Stander added that the results for the first half of the 2020 financial year showed that although revenue grew at 3% during the six months, the airline could not sustain the additional costs of 14% resulting from some underperforming investments and significantly higher fleet and maintenance costs which severely impacted the company’s profitability.
“While the decision to renew our fleet was the right one at the time, the pace of renewal in an underperforming economy placed a burden on operating costs and profitability. In 2019 alone we took delivery of five additional Boeing 737-800 leases, as well as a new Boeing 737 MAX 8 aircraft.”
“Despite our efforts over the last few months to preserve cash, maintain liquidity; divestment from non-performing acquisitions; aggressive cost reduction across the Group; taking back control of the fleet; and unlocking further operational efficiencies, more remains to be done,” said Stander.
She added that Comair had been acknowledged as one of South Africa’s Top Employers and remained proud of that, and their personnel were their greatest asset and consequently, reducing their staff complement was a decision taken with great regret.
“We continue to pursue cost reduction measures across the Group to mitigate the impact on our staff.”
The airline concluded by saying that for the foreseeable future their primary focus will be on restructuring the balance sheet as well as cash preservation.