South African airline Comair on Tuesday said it would enter into business rescue after its implementation of a turn-around strategy was disrupted by a national lockdown to flatten the curve in the spread of the Covid-19 novel coronavirus, grounding flights.
“While we had started making good progress to fix the financial situation six months ago, the crisis has meant we have not been able to implement it as we intended," Comair chief executive Wrenelle Stander said in a statement.
“We completely understand and support the government’s reasons for implementing the lockdown, however, as a result, we have not been able to operate any flights. Now that the phased lockdown has been extended the grounding is likely to endure until October or even November."
"These extraordinary circumstances have completely eroded our revenue base while we are still obliged to meet fixed overhead costs. The only responsible decision is to apply for business rescue," Stander added.
Comair, which operates British Airways and low-cost airline kulula.com in South Africa, said it had been granted approval to immediately suspend trading in its shares on the Johannesburg Stock Exchange (JSE).
The airline, which stopped flying on March 26, said a three percent growth in revenue was not enough to offset cost increases of 14 percent resulting from the significantly higher fleet and maintenance costs.
“Comair remains solvent and an important contributor to the South African economy. This is a necessary process to ensure a focused 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 Stander.
- African News Agency (ANA)
