South African private sector airline group Comair, currently under business rescue, has welcomed the approval of its proposed merger (with a company called SA Bidco) by the Competition Commission. This merger is part of the business rescue plan for the airline. SA Bidco is a recently created company that has no commercial operations; it was set up by former Comair executives and board members specifically to fulfil the business rescue plan.

The commission’s approval is conditional on the implementation of certain conditions. One of these is that, when the current retrenchment process is concluded, the airline cannot undertake any more retrenchments for three years from the date that it restarts operations (the exception is that retrenchments for operational reasons that had nothing to do with the merger would be allowed). Another condition is that employees retrenched under the current process will be granted a three year ‘recall’ period in which they would be offered re-employment by airline should jobs become available again (and should they have the right qualifications for those jobs). 

The Competition Commission’s ruling followed only days after various Comair creditors agreed to provide new loans to the airline and to accept deferments in the payment of current debts (both capital and interest) for agreed periods. This was a key suspensive condition for the implementation of the business rescue plan. (Another key suspensive condition, that a collective agreement be reached with trade unions which together represented 50% + 1 of the airline’s employees, was achieved in late September.)

“We have reached some major milestones in the business rescue process this [last] week and we are making good progress in finalising the investment,” affirmed Richard Ferguson, one of the business rescue practitioners. The focus was now on meeting the remaining conditions, in order to allow the investment in the airline to be made and become unconditional before the end of this month.

“We knew that the business rescue process wasn’t going to be easy, however, when the lockdown grounded us and we weren’t able to earn any revenue it was the only way to save the company and most of the jobs,” stated Comair CEO Wrenelle Stander. “It is very reassuring that we took the right decision at the time. It is certainly encouraging that such material progress has been made toward returning to service.”

“We’re immensely grateful for all the support we’ve had from everyone to reach this important point,” said Comair Rescue Consortium representative Glenn Orsmond. “We’re all looking forward to welcoming the flying public back on board again and for Comair to help rebuild the aviation sector and play our part in South Africa’s economic revival.”

It was hoped that the airline would resume operations next month. The business rescue process was expected to be concluded by March 31 next year.