Comair Ltd

COMAIR WAR NOT OVER

Comair may have succeeded in winning an interdict preventing the Air Services Licensing Council (ASLC) from potentially revoking its licence, but the war regarding the airline’s compliance in terms of foreign ownership is not over. On May 17, the Pretoria High Court granted Comair an interdict that “ensures continued operations”. The interdict application went ahead unopposed by the ASLC.

“Council is choosing to fight the merits of the case, which is the issue of compliance,” Andries Ntjane, deputy director for licensing and permits at the Department of Transport said. At a council meeting earlier this month, the ASLC found Comair to be non-compliant with the Air Services Licensing Act in terms of its foreign ownership, which stipulates that no more than 25% of the voting rights in a domestic airline may be held by foreigners.

The issue of compliance has to do with Comair failing to inform the ASLC of changes in its management plan and shareholding, particularly with regard to foreign ownership changes within its largest shareholder, Bidvest, says Ntjane. Comair ascertains that it is compliant with the Act. Ceo Erik Venter said: “Comair is confident that it has always been compliant with the Act and that the decision of the Council has no merit.” He says the initial complaint arose two years ago, when FlySafair laid a complaint with the council, alleging that when Comair bought back 10% of its shares that it resulted in a change in control and exceeded its 25% foreign shareholding. As Bidvest held 26% before the buy-back, the shareholding then moved up to 29%. This is still well short of the 50,1% needed for Bidvest to become a controlling shareholder, Venter says. “Likewise Comair had 17% foreign shareholding at the time, and this would therefore increase to 17% divided by 90%, which equals 19%, which is far from the 25% limit. So there is no merit in the argument of the share buy-back.”

FlySafair then proposed that the council look at the shareholders of Comair’s shareholders. That is, the foreign shareholders in Bidvest, as it must be assumed they exercise control in Comair via their shareholding in Bidvest. “This concept is completely impractical when applied to listed companies and is not applied in the Licensing Act or in common law,” Venter says.

The council will go to court within the next two weeks to contest the issue of non-compliance, Ntjane says. “We have to unpack the matter in court so the public can see with which aspects of the Act Comair does not comply. If the court determines that the airline does not comply with the Air Services Licensing Act then Comair’s licence will be cancelled and they will not be able to fly,” he says.