South Africa’s Comair Cancels Plan To Buy Star Air Businesses

Comair operates as LCC and as a British Airways franchise.
Credit: Comair

South African carrier Comair has abandoned its acquisition of Star Air Cargo and Star Air Maintenance.

Comair originally announced plans to buy the two companies from Sundrops Investments, Smashing Star Investments and Marcel Liebenberg for R75 million ($3.9 million)—plus further profit-share payments—on May 30, 2019.

Star Air Cargo holds a South Africa air operator’s certificate (AOC) and specializes in short- to mid-term aircraft leases. Star Air Maintenance performs maintenance work for Star Air Cargo and third-party customers.

At the time, privately owned Comair said the companies fitted with its diversification strategy. The Star Air units would allow it to branch out into aircraft leasing and to establish its own maintenance operation for its Boeing 737-800 fleet.

However, Comair issued a stock market disclosure on April 3 announcing that the deal had been canceled.

“Shareholders are now advised that with effect from March 31, 2020, the parties by mutual consent, agreed to terminate the agreement,” Comair said.

Comair, which operates as LCC and as a British Airways franchise, had been profitable every quarter for 73 consecutive years. However, in December 2019 the company posted its first headline loss, despite revenues increasing by 3%.

The airline has been buffeted by several factors, including the Boeing 737 MAX grounding, set-up costs linked with a major maintenance transition, and South African Airways’ (SAA) entry into administration, which halted payments from a legal settlement between the two airlines. These issues all pre-date the COVID-19 crisis, which is having a debilitating effect on aviation worldwide.

On March 11 Comair Group CEO Wrenelle Stander said the group was considering selling off some non-core businesses to weather the storm.

“Comair has been having some really, really strong headwinds. We have had some really big uncontrollable items that have impacted our performance,” Stander said, delivering a keynote address to the Aviation Club of the UK on March 11.

After a strong acquisition drive into aviation support services, Stander said three or four of the group’s business were struggling. One of those was urban business-lounge brand ‘SLOW in the City,’ which she said could be shut down if new owners were not found for it.

On March 23, Comair announced that it had initiated Section 189 redundancy proceedings as part of a financial recovery plan.

“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 underperforming investments and significantly higher fleet and maintenance costs which severely impacted the company’s profitability,” Stander said.

Victoria Moores

Victoria Moores joined Air Transport World as our London-based European Editor/Bureau Chief on 18 June 2012. Victoria has nearly 20 years’ aviation industry experience, spanning airline ground operations, analytical, journalism and communications roles.