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Comair R1bn SAA windfall another financial blow for SAA

Settlement brings final end to 14-year spat.

The share price of JSE-listed aviation group Comair Limited shot up by more than 20% by close of trade on Friday, after it announced that it would be getting R1.1 billion from state-owned SAA. This follows a settlement deal being reached over an anti-competition case dating back 14 years.

It’s a major windfall for Comair, which operates kulula.com and British Airways in SA, but comes as a further financial blow to cash-strapped SAA.

Comair advised shareholders of the settlement with SAA in a Sens statement, which relates to a damages claim served by Comair against SAA in respect of the national airline’s anti-competitive travel agent incentive schemes.

Read: Comair hopes to up R1.1bn SAA damages award

In the Sens statement, Comair said it was pleased to advise shareholders that it has entered into a full and final settlement agreement with SAA. The settlement agreement was made an order of court by the Supreme Court of Appeal (SCA).

“In terms of the Settlement Agreement, SAA will pay Comair a settlement amount of R1,108,040,000 plus interest. The settlement amount will be made in accordance with a payment schedule commencing on 28 February 2019 and terminating on 28 July 2022, or earlier should SAA elect to make payments earlier than agreed,” it said.

In addition, SAA will pay Comair’s taxed legal costs incurred to date. Both Comair and SAA will withdraw the appeal and cross-appeal currently pending before the SCA.

SAA’s settlement with Comair follows the South Gauteng High Court ruling in favour of Comair in its damages claim in February 2017. Comair declined to comment further on Friday.

In its response to Moneyweb queries over the weekend, SAA spokesman, Tlali Tlali, had a conciliatory tone, saying “the finalisation of this case marks the conclusion of one of the disappointing legacy matters, which has dragged on for far too long and was overdue”.

Tlali notes: “The current airline leadership at board and executive management level is committed to closing all legacy issues and to start on a clean slate. This case was one of the unnecessary and yet protracted legal battles, which only served to maximise risk exposure for the airline. The SAA/Comair dispute could and should have been handled differently.”

He adds: “The current SAA leadership will act decisively on matters that must be finalised to ensure that there is mitigation against any possible liability that may arise from any legacy issues. The finalisation of this matter is a deliberate decision by SAA, to clean up and focus on transforming the airline as it undertakes the journey towards financial sustainability. The airline must execute its strategy without being distracted by legacy issues in order to reach a break-even point by the end of financial year-end 2021.”

Tlali says SAA is on track in implementing its turnaround strategy, with the national airline “making good progress” and has already met a number of targets it has set in the implementation path.

While the settlement brings a final end to the 14-year spat, it represents a double financial blow for SAA by Comair within six months. In October Comair announced it would cease giving SAA Technical millions of rand in aircraft maintenance business due to poor service from SAA. It planned to move its aircraft maintenance offshore and partner with Lufthansa.

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love the headline “blow for SAA”. In case you haven’t noticed SAA has for quite a while not been able to generate any money, so the blows flow straight through to us. Should have been “another blow for SA taxpayers”

talker, it was a blow to taxpayers in the old days, but nowadays is more likely to be a blow to the gravy-train-people, as they will have less to steal from.

btw, i think we should start calling ourselves taxprayers

Having been involved in early skirmishes – before formal action was taken, I have been kept informed of developments – or rather non-developments.
All I can say is that the lawyers who ended up taking positions on both sides must be sad all is over – regular HUGE monthly invoices have been the order of the day since beginning.
SA’ns should also focus on the exorbitant legal fees paid by State and SOE’s over the years to further the protection enjoyed by those close to the ruling party – – – – funded by SA TAXPAYERS

Excellent point; and, for SAA (RAF etc etc) such lawyers seem mostly useless. ANC cronies?

So, a taxpayer-funded regulator determined that the taxpayer pays for a taxpayer-funded monopoly for using taxpayer funds to unfairly compete with a tax-paying company. SA has reached new levels of absurdity.

The taxpayer has poured so much money into SOEs such as SAA, SABC, Eskom etc that we should be getting free flights, free TV and free electricity. Unfortunately only those contributing the least to the economy are receiving these benefits.

Even our children and future (not born yet) grand children should get free jobs at SAA, Eskom, PetrosSA, do not know about SABC (not relevant with Netflix and Amazon around)

More wasted tax-payer money. The really, really strange thing about this country is that those who pay tax have come to the stark realisation that they should not expect anything in return whereas those that don’t pay tax expect everything. I guess it is just the way payers and non-payers were brought up!

14 years????????????? The lawyers must have had a ball prolonging this on technicalities.

Dear pwgg
Yes; it was one of mine.
Your sincerely,
A Taxpayer

The legal teams/advisors of the State & SOE’s seem to be clueless (LAWless), as the former have often been ill advised by their legal teams.

Surely this is the writing on the wall? Just why the hell is SAA not shut down and sold as a defunct bankrupt failure of the ANC. SAA does not belong to there ANC, and it never did in the past or in the present. SAA existed in good health long before the ANC came to power. SAA belongs to the taxpayers. We want it sold before the ANC cost us more money yet again.

Has anyone considered the implication of that “with interest” clause?
If the interest is payable for the whole 14 year period the total sum will amount to more than R2.3 billion at a conservative compound rate of 6%.

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