While you were asleep: Comair in danger of having its wings clipped

Less than a week after restarting operations a Comair operated flight faced difficulties landing on Saturday before finally being able to touch down at Cape Town airport.

The British Airways flight from Gqebhera to Cape Town was unable to land four times and caused a 15-minute delay for passengers. The reason for the safety precaution was a landing gear warning indication, which meant standard safety checks were needed.

The latest safety issue comes after Comair, which also operates low-cost carrier kulula.com, was regranted its Air Operator Certificate (AOC) on Wednesday evening after all its operations were grounded indefinitely by the South African Civil Aviation Authority (SACAA) on Sunday due to safety-related issues. The suspension was initially supposed to be for 24 hours from Saturday afternoon but was extended the following day.

The delay on Saturday had a knock-on effect with some services cancelled and passengers had to be accommodated via other flights while political party, the EFF said all Comair flights should be grounded as the airline was putting passengers at risk.

Comair said on Monday it was shifting its aircraft maintenance away from Lufthansa Technik Maintenance International (LTMI) to South African Airways Technical (SAAT).

LTMI has come under fire recently after an unscheduled review from the SACAA last week found several findings that had to be addressed by Monday (yesterday) evening otherwise LTMI would have its Approved Maintenance Organisation (AMO) licence suspended.

Currently, Comair uses both LTMI and SAAT services, but the airline said the decision to move all operations to SAAT was a pre-emptive measure while pointing out that LTMI ranks as one of the most respected airlines and maintenance facilities in the world.

The latest spat of safety concerns will surely impact Comair’s already struggling financials after around R100 million in revenue was lost due to cancellations when the omicron variant was first discovered last year.

The airline entered business rescue in 2020 following a financial loss in 2019, a smothering debt load and the onset of the Covid-19 pandemic that floored the aviation industry globally.

The preferred bidders for Comair are a consortium of former directors who have so far injected R500 million into the airline while additional funding of R1.4 billion has been secured from commercial banks.

If Comair were to fold it would have immense consequences for the air travel industry. Comair currently serves around 40% of domestic travel capacity and if the airline were to disappear overnight, the remaining airlines would have to try to pick up the demand, which would likely lead to ticket price increases.

Comair is a South African business success story with a seven-decade track record and solid financials to back it up. It would be a sad day if the airline were to fold.

There were some significant developments in markets yesterday as the EU contemplates a ban on Russian Oil and US Fed Chairman Jerome Powell hints at a possible 50 bps hike at the next FOMC meeting, comments TreasuryONE.

The rand traded below the R15.00/$ mark and closed at R14.90/$ yesterday while this morning the local unit has opened slightly weaker at R14.97/$. Local unemployment figures, due out later today, could also shift the needle somewhat.

“Precious metals had a good day yesterday, with gold, platinum, and palladium all closing higher on the day. This morning, we have the three metals trading relatively flat at $1,937 for gold, $1,041 for platinum, and $2,582 for palladium,” says TreasuryONE.

The price of Brent is up at $118.90 as the EU looks at imposing an embargo on Russian Oil and after the attack on the Saudi oil refinery.