Comair swings into a loss as maintenance costs rise

Picture: 123RF/ANTONIO GUILLEM
Picture: 123RF/ANTONIO GUILLEM

Comair, the listed operator of low-cost carrier kulula.com and British Airways (BA) in SA, warned on Thursday that it had swung into a loss in its six-months to end-December due to higher maintenance costs and the grounding of its new Boeing 737 MAX 8 aircraft.

Headline earnings per share are expected to be more than 170% lower than the prior comparative period, Comair said, resulting in a headline loss for the period.

The decrease in earnings relative to the comparative period follows an increase in operational costs and maintenance costs arising from the replacement of five owned B737-400 aircraft with five leased B737-800 aircraft.

In addition, there has been an increase in aircraft line maintenance costs arising from the transition of the fleet from SAA Technical to Lufthansa Technik, Comair said.

Earnings continue to be affected by the grounding of the airline's Boeing 737 MAX 8, with Comair saying on Thursday it is still negotiating compensation from the US aircraft maker.

SAA also failed to make payment due in December related to a settlement agreement regarding SAA’s anti-competitive conduct in an incentive schemes for travel agents, Comair said.

SAA, which has gone into business rescue, is supposed to pay Comair a total of R1.1bn as part of the settlement agreement. Comair alleges that SAA paid travel agents to divert customers to its flights between 2001 and 2006.

gernetzkyk@businesslive.co.za

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