Comair has abandoned its plans to acquire Star Air Cargo and Star Air Maintenance for R75 million amidst financial challenges for the airline group.
Comair on 30 May 2019 had agreed to purchase the shares and claims of Star Air Maintenance and Star Air Cargo from Sundrops Investments, Smashing Star Investments and Marcel Liebenberg.
However, Comair said that “shareholders are now advised that with effect from 31 March 2020, the parties by mutual consent, agreed to terminate the agreement, such that the agreement shall cease to have any further force or effect.”
Comair has been hit hard by the COVID-19 coronavirus pandemic and other challenges, including the grounding of the Boeing 737 Max 8 and additional costs whilst switching its maintenance provider from SAA Technical to Lufthansa Technik (Comair will be paying for two providers until at least mid-2021.)
“Our results for the first half of the 2020 financial year showed that although our revenue grew at 3% during the six months, we could not sustain the additional costs of 14% resulting from some under-performing investments and significantly higher fleet and maintenance costs which severely impacted the company’s profitability,” said Comair chief executive Wrenelle Stander in a trading update on 23 March.
“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.”
Comair operates the Kulula and British Airways airlines in South Africa.