South African carrier Comair warns that it expects to post a loss for the second half of 2019 because of the ongoing Boeing 737 Max grounding and an unpaid debt by South African Airways. The British Airways franchise partner, which also operates budget unit Kulula, says in a notice to the Johannesburg Stock exchange that its earnings per share for the six months to December 31 are expected to be more than 170% lower than the comparable period of 2018. The carrier attributes the loss to increased operating costs from replacing five owned Boeing 737-400s with five leased 737-800s, as well as increased line maintenance costs arising from the transition of its fleet from SAA Technical to Lufthansa Technik. “Furthermore, earnings continue to be negatively impacted by cumulative losses incurred as a result of the ongoing grounding of the Boeing 737 Max 8,” states Comair, adding that compensation negotiations are “underway” with Boeing but remain unresolved as yet. Comair had taken delivery of one Max 8 before the grounding took effect. It was due to receive a second in March 2019 and a third this month. The airline says it has received “no revised delivery dates” from Boeing. Adding to the carrier’s woes, South African Airways last year agreed to pay Comair Rs1 billion ($67.4 million) over the course of a period beginning on 28 February 2019 and ending 28 July 2022, in order to settle a long-running legal dispute over travel-agency incentive schemes. However, Comair states that SAA “failed to make the payment of the capital and interest amount due on 28 December 2019” and is now “in breach of its obligations in terms of the settlement agreement”. The carrier adds that SAA still owes it R790 million but says “the future recoverability of the outstanding amount is uncertain” because SAA has now been placed under business rescue.

Source: Cirium

SA Airlink plummeted to a loss of R365 million in November 2019 – compared to a profit of R84 million in September and R50 million in October – as a result of South African Airways withholding revenue from ticket sales, the Johannesburg High Court heard on Tuesday. The private airline has taken the flag carrier to court over revenue it says SAA owes it for ticket sales generated towards the end of 2019. Initial court papers reportedly indicated that SA Airlink was suing SAA for R700 million, which it wanted the court to order to be paid up within five days. SAA was placed under business rescue in early December 2019. The airline's business rescue practitioners, Les Matuson and Siviwe Dongwana, have previously argued that the monies in dispute are pre-commencement debt, which means they would be classified with other debts SAA incurred shortly before going into business rescue. But according to Airlink's lawyer, Adv Rafik Bhana SC, the funds owed to Airlink were revenue from tickets sold in November and December 2019 through SAA's booking system. SAA earns a commission from such ticket sales. The court heard that SAA did not pay the revenue to Airlink because the funds were deposited in SAA's bank account and got mixed up with its other funds, making it difficult to meet Airlink's demands easily. "It would be unthinkable if SAA took those funds and used them to fund its own operations and then said to Airlink: 'We owe you the money and will pay it in 30 days or 90 days'. It is unthinkable because it is clearly in breach of the agreements... and that is what business rescue practitioners opportunistically want to do here," Bhana argued. SA Airlink now faces the risk of running out of working capital by the end of this month, the court heard, leaving over 1 700 jobs at risk. Airlink operates on 55 routes to 39 destinations in nine African countries. Its CEO, Rodger Foster, previously said the airline was able to cover costs short-term, but could not write off several months of turnover without suffering a major impact. "The airline business is characterised by the sale of high volumes of perishables at low margins. At the same time, there are significant capital and operational costs associated with running an airline, which necessitate continual downward pressure on costs and having enough cash available to cover them," Foster said. Judgment was reserved.

Source: FIN 24

Investigators have disclosed that a new Air Baltic Airbus A220-300 which diverted to Bordeaux on 12 February had suffered an engine failure. While the details of the failure, in the left-hand Pratt & Whitney PW1500G powerplant, have yet to be disclosed, the incident follows a series of engine failures on the type involving Swiss aircraft. The Air Baltic twinjet involved, YL-AAU, had only been delivered to the airline in early December – the aircraft was the 100th of the type to be produced and carried ceremonial markings. French investigation authority BEA says the jet had been operating a service from Riga to Malaga when it diverted. The aircraft had been close to entering Spanish airspace at the time of the incident, and landed at Bordeaux around 10:30. Investigators probing three previous occurrences of low-pressure compressor rotor failure to Swiss A220s had cautioned operators to limit engine power at cruise altitudes. Inspection regimes have also focused on engines which have accumulated relatively few cycles since installation of a particular engine-control software version.

Source: Cirium