Comair, the profitable JSE-listed airline business with one of the local industry’s worst on-time departure records, is laying the blame at the door of its service agent SAA Technical and is moving much of its major maintenance requirements offshore, while it waits for official approvals to set up its own workshops in co-operation with German carrier Lufthansa.
The announcement, made in an open letter by CEO Erik Venter on Wednesday, came just before Finance Minister Tito Mboweni announced plans for (yet another) serious shake up of SAA and revealed the state would continue to support both the national carrier and SA Express financially.
While assuring parliament during the Medium-Term Budget Policy Statement that he was working with his predecessor and current public enterprises minister Pravin Gordhan to limit the cost to the fiscus, further bailouts were required to make the state airlines viable.
While there is no decision yet on whether there will be a merger between SAA and SA Express, Mboweni gave government's first serious indication that the assets could be up for sale or at least take on a private sector partner. Gordhan suggested this while Mboweni appears fully committed to the idea to reduce the impact of the carrier on the national balance sheet.
SAA will be getting R5 billion to help the airline repay a R14.2 billion debt due in March, on top of the R10 billion it got last December to pay off debt and fund operations. SA Express will receive a R1.2 billion injection.
"Reconfiguring our state-owned companies requires us to take a hard look at how they operate. Our current challenges with state-owned companies present an opportunity to demolish the walls that exist between the private and public sectors,” Mboweni promised.
In the meantime, Venter at Comair has run out of patience and is budgeting R100 million for contingency measures while he makes alternative arrangements to servicing at SAA Technical.
“As far as possible, Comair has moved all major maintenance requirements overseas; Comair has, with Lufthansa Technik (LHT), initiated registration of an AMO (Approved Maintenance Organisation), with the objective of moving Comair’s new aircraft deliveries directly to LHT AMO as they arrive in South Africa. Unfortunately, it takes some time to obtain all the necessary licenses from the SACAA (SA Civil Aviation Authority) and ACSA (Airports Company of SA)."
As it gears up for the busy holiday season Comair knows it needs to dramatically improve its departure time record, which is as low as 67% for Kulula at King Shaka International, and is taking extraordinary measures to ensure it can cope with the vagaries around servicing.
The airline will take on five additional reserve aircraft to back up its current fleet of 21 and will also embark on a wet lease of a further Airbus A320 which involves the hiring of not only an aircraft but crew as well. That lease will continue indefinitely.
“We have taken the decision to manage the delays and still get our customers to their destinations, rather than to simply cancel our flights, which would improve our on-time statistics but at the expense of our customers,” Venter said.
Bruce Whitfield is a multi-platform award winning financial journalist and broadcaster.
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