British Airways could consider a new South African partner

After years of collaboration, British Airways has canceled its franchise agreement with Comair. Comair is a South African airline that sports British Airways liveries and operates domestic and regional flights around Southern Africa on behalf of British Airways. With the termination of this agreement, it is expected that British Airways will seek a new partner to fulfill this role in South Africa.

A terminated contract

Recently, British Airways terminated its franchise agreement with Comair. Comair has been operating regional and domestic flights in South Africa for years on behalf of British Airways. The termination occurs following a cancellation trigger previously included in the contract between the two airlines. The cancellation would be triggered if Comair were to go into provisional liquidation.

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Comair recently entered into provisional liquidation following the company’s financial difficulties in recent years. The airline had to cease flight operations on May 31 due to a lack of sufficient funding to cover operational costs. Leaving the two airlines in a difficult situation. British Airways will need to find another airline to operate flights previously flown by Comair to meet both current and future demand for air travel in South Africa. Otherwise, it will have to divert a large portion of its short-term assets to meet this demand.

Comair will have to repaint all its planes with British Airways liveries. Photo: Boeing

Comair will have to redefine its business strategy to operate for another airline or establish its own routes and attract passengers. It will no longer be allowed to sport the British Airways livery, which means that all planes will undergo an expensive repainting process. All aircraft with this livery will either have to be repainted for another airline if Comair makes agreements to operate for another airline, or they will have to sport a neutral or Comair livery.

Looking for new friends

British Airways will have to quickly provide a situation to the massive disruption of flights that are sure to follow this termination agreement. The provisional liquidator in charge of the liquidation of Comair, Cloete Murray, said:

“I understand that BA is now looking for a new partner in the South African market,”

British Airways is not the only party in talks with other airlines. Since the start of the provisional liquidation process, Comair has received 21 letters from various parties seeking to acquire either the airline or its assets. The identity of these potential buyers has not yet been revealed. Unlike many contract airlines, Comair owns all of its aircraft independently of British Airways, allowing it to use the value of these assets to help the company financially.

Comair will likely sell many of its aircraft if it does not choose to sell the entire airline. Photo: Boeing

Few airlines could currently fill the role that Comair played for British Airways, as around 40% of the domestic aviation market in South Africa is operated by Comair. Unfortunately for Comair, the pandemic has had a major financial impact on the airline. Since the pandemic, it has struggled to recover its losses, which has led it to provisional liquidation.

While Comair is in provisional liquidation, British Airways has terminated its franchise agreement with the South African airline. This leaves a huge void in the market and both airlines need to adapt quickly to meet demand. As Comair needs to restructure, British Airways is scrambling to find another airline to fill this role.

What do you think of this latest franchise break? Let us know in the comments below.

Source: end24

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