A South African airline company, Comair, has filed for bankruptcy and entered the nation’s voluntary business rescue program after rising incidence of coronavirus in the country necessitated the implementation of an indefinite suspension of commercial flights.
The company, which operates the South African franchise of the British Airways and also runs a local airline, Kululu, disclosed that the decision was due to a record 564 million rand loss, which was incurred due to the five-week-long coronavirus lockdown in the nation.
The Chief Executive Officer, Comair, Wrenelle Stander, cited the recent extension of lockdown in the nation and said that declaring bankruptcy and entering the voluntary business rescue program was the only course of action available to the embattled company.
Stander, through a statement released on Tuesday, disclosed that the prolonged lockdown had brought an abrupt end to the company’s revenue generation despite its continued need to meet fixed running costs and that Comair’s move into the voluntary business rescue program had become inevitable.
He noted that the lockdown extension meant that airlines would remain grounded until around November and that companies such as Comair would record major financial losses due to the coronavirus induced challenges.
“Now that the phased lockdown has been extended, the grounding is likely to endure until October or even November. These extraordinary circumstances have completely eroded our revenue base while we are still obliged to meet fixed overhead costs”, he said.
The Guild gathered that Comair was granted immediate approval to suspend the trading of its shares on the Johannesburg Stock Exchange platform.