Court order averts Comair suspension

Comair CEO Erik Venter

The licensing council was due to decide yesterday (11 May) on the suspension, saying it had found that Comair had exceeded the 25% limit for foreign shareholding of a domestic airline. However, Comair says it is compliant, and on Monday it applied in the High Court in Pretoria for an interdict to stop the council from suspending its operations until a court reviewed its case.

Comair's second interdict yesterday followed a meeting with the licensing council at the Department of Transport in Pretoria. It requested certainty from the council that it would not suspend the group's airlines before Tuesday's hearing. But the council said it could not guarantee that Comair would not be suspended and Comair approached the court.

Comair CEO Erik Venter said last night that it had resorted to "extra-ordinary measures" to ensure operational certainty. "We are pleased that this result will place the burden of decision into a court of law where Comair will be afforded a fair opportunity to make representation as to why we are confident in our compliance with the act," he said.

Venter said Comair wanted the interdict before the council had written its decision. He said the interdict was sought because the licensing council had not given certainty that it would not suspend the airline.

Department of Transport deputy director for licensing and permits Andries Ntjane said yesterday Comair had already been given 120 days to submit information on its shareholding but the council was not satisfied with the submissions. Comair asked for a further extension until yesterday. He said Comair had gone "off track" by approaching the courts instead of providing the necessary documentation to the council, which is an independent regulator. "You can't just rush to court before council has made a decision," said Ntjane.

Shareholders of the shareholders

Comair operates 411 flights on kulula.com and 400 regional and domestic flights on British Airways, and a suspension would mean all its domestic flights would be grounded.

Transport economist and aviation expert Joachim Vermooten said the licensing council should have looked at the shareholders of Comair as the holding company, as that is the entity that should be regulated.

Comair is 11.5%-owned by British Airways, according to its 2015 annual report. Its largest shareholder is Bidvest, which owns 27%, followed by Allan Gray with 12.9%. Vermooten said the council had instead focused on the shareholders of the shareholders. "They should just look at the airline shareholders of Comair as the regulated entity and not the shareholders of the shareholders." He said that it was necessary and understandable that the regulator would want oversight as the aviation industry had specific safety issues and accountability was important.

Last year, empowerment group Thelo, led by Ronnie Ntuli, sold its 6.1% stake in Comair to HNA Group, a Chinese multinational, for R160m. In 2013, Atul Gupta disposed of his shares in Comair, which were worth more than R68m.

Shareholder and management changes

The licensing council has also charged Comair with not communicating shareholder and management changes with the council for 17 years. The matter dates back to 2013, when low-cost carrier Flysafair, a new entrant in the market, brought the matter to the council's attention. Flysafair argued that Comair had breached the 25% limit for foreign shareholding but withdrew from the case last year.

Comair issued a SENS announcement only on Tuesday announcing that it had applied for an interdict against the council. Venter said Comair did not have to issue a SENS announcement to shareholders in previous years because it was public information contained in the company's annual report. But the JSE yesterday said it was looking into whether the company had complied with disclosure requirements.

"The JSE is aware of the matter and is currently assessing it and will be engaging the company in this regard," it said.

Source: Business Day