Reference no: EM133313156

Case Study: Even If Comair Gets Money In Time, Flights Will Likely Restart In September Even if the necessary funding to save Comair can be obtained in time, its kulula.com and British Airways flights will most likely then only restart on 1 September. This means that in the interim, Comair's business rescue practitioners cannot guarantee that employees will be paid from June onwards until and if the airlines can restart. This is according to internal communication, seen by Fin24, from the company to employees on Tuesday. "The timeline takes into account the process required to conclude all legal processes and the time required to prepare operationally, with adequate time for advance ticket sales," the letter states. Comair has been in business rescue for the past two years. It says it has been impacted by rising debt due to pre-pandemic fleet renewal plans, the impact of the Covid19 pandemic on the aviation industry, and recently the rising fuel cost. On Tuesday Comair's business rescue practitioner (BRP), Richard Ferguson, met with union representatives. He indicated that the BRPs and management are holding ongoing discussions with potential funders to secure restart funding. The BRPs were able to preserve cash to ensure that salaries for May, medical aid, PAYE and risk benefits were paid. "Should our fundraising efforts not be successful, the next step would be to move from business rescue into liquidation proceedings. Should this happen, employees' salaries cannot be paid, subject to the preferred rights of employees in terms of the Insolvency Act," states the internal communication. Approximately 140 "skeleton staff" have been identified to carry out tasks which are crucial to keep the business running. They will be paid according to the time they work. Phakamile Hlubi-Majola, spokesperson of the National Union of Metalworkers of South Africa (Numsa) told Fin24 that the BRPs emphasised at the meeting with unions on Tuesday that Comair is in very serious financial distress. She says the BRPs indicated that they possibly only had a few weeks to secure the funding or they would have to wind the company down. "As Numsa we are very concerned as this will impact jobs. And we are still annoyed that the BRPs decided to suspend flights without bothering to consult the unions. We are also concerned about the impact on passengers and the company's brands," said Hlubi-Majola. Numsa intends to apply to the Department of Labour to see if Comair employees can in the meantime make use of a training layoff scheme to enable them to at least get some form of income. Numsa has undertaken to also try and find a suitable investor for Comair.

Source: Smith, C. 2022. Even if Comair gets money in time, flights will likely restart in September. [Online] Available from: Answer ALL the questions in this section.

Question: Consider the facts in the article above, where it is clear that Comair has hit hard times. With reference to the article, critically discuss the typical strategies available to organisations in decline.