Comair recovery bolstered by capital inflows
September 13, 2021
South African carrier Comair has secured capital inflows of R270 million ($19 million) following the sale of its SLOW Lounge business to FirstRand Bank for R250 million and the receipt of a R20 million payment from South African Airways (SAA). The move is a "significant step" towards the successful conclusion of Comair's business rescue process, according to its administrators. The process was initiated as the carrier battled heavy losses amid Covid-19. Comair, which operates the kulula.com low-cost brand and a British Airways franchise on domestic routes, suspended services between 5 July and 1 September because of pandemic restrictions. "There is still work to be done but these capital inflows, the fact that Comair is back in the skies and again earning revenue coupled with the commitment by the investors to support the viability and sustainability of the business all point to a positive outcome," states Richard Ferguson, one of Comair's business-rescue practitioners. The payment from SAA was part of R1.1 billion that the state-owned business owes Comair under a damages settlement for anti-competitive behaviour. SAA made an initial payment of R289 million in February 2019, with the balance payable in instalments until July 2022. These payments ceased when SAA entered administration in December 2019.
Australia's watchdog rejects Qantas-JAL joint venture
September 13, 2021
The Australian Competition and Consumer Commission (ACCC) has denied authorisation for Qantas and Japan Airlines to coordinate flights between Australia and Japan for three years. This is part of a five-year joint venture the Oneworld alliance members disclosed on 23 December, to operate between Australia, New Zealand, and Japan. Pending regulatory approval in Australia and New Zealand, the JV was targeted to commence operations around July, in line with Qantas's projections then for a gradual restart of its international network. In a statement today, the ACCC says the proposed JV would likely lead to reduced competition as international travel resumes. It would likely have allowed services to be reinstated more quickly when borders reopen, which may initially stimulate tourism, ACCC chair Rod Sims states. "However, the longer-term benefits of competition between airlines are cheaper flights and better services for consumers, which is vital to the recovery of tourism over the coming years." According to the ACCC, Qantas and JAL flew about 85% of passengers travelling between Australia and Japan in the year before the pandemic. They were each other's closest competitors on Sydney-Tokyo, the largest route, and the only operators on Melbourne-Tokyo, the second-largest route. "The ACCC concluded that granting the authorisation would not only remove competition between Qantas and Japan Airlines, it would make it very difficult for other airlines to operate on routes between Australia and Japan." It adds: "Virgin Australia told the ACCC that it would be more difficult to enter the Australia-Japan route if it is required to compete with Qantas and Japan Airlines acting jointly rather than as individual competing airlines." Data shows that in 2019, Qantas accounted for 42% of total seat capacity on all Australia-Japan routes, and Japan Airlines accounted for 14%. Qantas Group's low-cost carrier Jetstar Airways supplied 32% of seats on the sector and ANA, 12%. In May, the ACCC issued a draft decision to deny authorisation and following that, Qantas offered to launch a new service between Cairns and Tokyo once certain demand thresholds were reached, the commission said. Sims states: "We think Qantas could commence a new Cairns service without the alliance, and the timing of any such service would be best determined by commercial factors in a competitive environment. Jetstar services on this route are currently planned to start again from February 2022, without the alliance." Qantas last flew between Cairns and Tokyo Narita International airports in 2008. Jetstar Airways has been the sole operator since 2009 and pre-pandemic, flew five to seven times per week in 2019. The ACCC says that it has granted exemptions from competition law during the Covid-19 pandemic, typically for short periods and involving targeted proposals to ensure supply of resources. "The Qantas and Japan Airlines alliance would have allowed the airlines to stop competing on all aspects of price and service for three years." In a separate joint statement today, the airlines expressed their disappointment at the competition watchdog's decision, stating: "Qantas and JAL will continue their existing codeshare and Oneworld partnership, which do not provide the same benefits than would have been possible under a joint business." The airlines are also partners in joint-venture budget carrier Jetstar Japan. The ACCC's decision is "particularly unfortunate" for Cairns and its state of Queensland, which would have benefited from direct routes to Tokyo, states Qantas Domestic and International's chief executive Andrew David.
LATAM cancels its last two A350 orders
September 10, 2021
The three order cancellations that Airbus recorded in August comprised two for the A350 from LATAM and one for the A220 from Air Vanuatu. Airbus data shows that the two cancelled A350-1000s were the last two orders held by the Latin American airline group for the Rolls-Royce Trent XWB-powered long-haul jet family. LATAM has removed A350's from its operations as part of restructuring under US Chapter 11 bankruptcy protection. In 2015, LATAM Airlines Brazil received the group's first A350-900 from an original order for 27 of the type. The group converted some orders to the A350-1000, but subsequently lost interest in the larger variant and did not put it in service. Data shows that LATAM's remaining A350 fleet comprises three in-storage aircraft, including two managed by lessor AerCap. LATAM is the sole A350 operator based in Latin America Air Vanuatu, meanwhile, has cancelled an A220-300 from its order of two A220-100s and two -300's. The order had been placed in 2019, and deliveries scheduled to start in mid-2020. Air Vanuatu has a Boeing 737-800, an ATR 72-600, three Viking Air Twin Otters and a Britten-Norman Islander. Another ATR 72-600 is on order, in addition to the A22'0s.