Comair going after SAA debt

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Comair going after SAA debt

Published Date: 2020-02-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

Comair going after SAA debt

The airline group has now increased the loss allowance for a settlement owed by SAA to the full outstanding amount of R790 million.

Comair says it plans to recover debt owed to it by SAA even after making a loss provision for the full amount in its latest results.

In a further trading statement, the airline group said it had decided to increase a loss allowance against an SAA damages claim by a R505 million, adding to the R295 million recorded last June. It's still owed R790 million by the national carrier following a R1.1 billion settlement a year ago after SAA was found to have contravened the Competition Act. SAA was placed into voluntary business rescue in December.

The loss allowance comes on top of a number of other headwinds for Comair, which operates kulula.com and has a licence agreement with British Airways in SA. Operational costs have risen after it replaced five of its owned aircraft with rented planes, resulting in lease and maintenance costs. It said shifting aircraft maintenance from SAA Technical to Lufthansa Technik added to rising expenses. And compounding its problems, earnings have also been negatively affected by cumulative losses following the grounding of the Boeing MAX 8 aircraft.

Boeing's MAX 8 fleet was ground globally last year, shortly after Comair took delivery of the first of the two aircraft it had ordered. That followed the crashes of two MAX 8 aircraft belonging to Lion Air and Ethiopian Airlines, which killed 346 people.

Comair said earnings and headline earnings per share for the six months to end-December are now expected to be between 534% and 554% lower than those reported a year earlier, resulting in losses of between 118c and 123c per share.

Its results are scheduled for release on 26 February. Its shares closed 2.9% higher at R2.80 yesterday. They've halved in value over the past year.





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