Comair Counts Cost Of SAA Technical Extrication

Comair 737 MAX 8s

The struggles of state-owned airlines are usually good news for their privately owned rivals, but in South Africa the fallout from mismanagement of flag carrier is not limited to South African Airways.

Last year we reported that airline and tourism group Comair, which own South Africa’s British Airways franchise as well as low-cost carrier Kulula, had suffered from maintenance scheduling problems and parts shortages at SAA Technical.

These and the grounding of the Boeing 737 Max contributed to ZAR195 million of extra costs in the year to 30 June 2019, which led to a 68% fall in operating profit.
The company is switching its line maintenance to Lufthansa Technik, but a full transition won’t occur until later this year and it does not expect to reap any cost benefits until 2022.

Meanwhile, for H1 2020 the company has reported a ZAR215 million increase in maintenance costs arising from the replacement of five owned 737-400 aircraft with five leased 737-800s, as well as additional line maintenance costs arising from the transition to Lufthansa Technik.

Exasperated as Comair was with SAA Technical, it did win a ZAR1.3 billion settlement from the parent airline over past anti-competitive behavior by South African Airways.
Or so it thought: in its latest financial statement, for the six months to 31 December 2019,

Comair said that it was uncertain if it would recover the outstanding ZAR790 million from that settlement following SAA’s entry into ‘business ‘rescue’ creditor protection.

Of a headline loss of ZAR564 million ($37 million) for the six months to 31 December 2019, Comair attributed ZAR450 million to an increase in its loss allowance on the SAA damages claim.

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.