Hilka Birns/CAPE TOWN
Comair, South Africa's largest domestic airline group and a British Airways franchise partner, becomes the first of the country's carriers to move to a flotation with a listing on the Johannesburg stock exchange planned this week.
The flotation, which values the company at some R1 billion ($160 million), will still leave the company's management with the largest single block of shares at 39.5%. Another 28% will also stay in the hands of existing institutional investors, with another 5% earmarked for employees. The new shares, to be placed on 22 July, represent around 28.5%of the company and are expected to fetch some R287 million. A stake of only 1% is destined to be put on direct offer to the public, with the bulk of the issue being placed with investors, including a 9.5%stake for the CNI black empowerment group.
CNI's involvement could help ease the way towards Comair's aim to merge with Sun Air, the fellow domestic carrier in which it acquired a 25% during last year's privatisation. Discussions have taken place with the Rethabile empowerment group which emerged with a 35.7% stake in Sun Air after the privatisation, but no decision has yet been taken.
One solution to be mooted is for CNI, which holds the remaining 19.5% of the airline, to take over Rethabile's stake. Comair is also reported to have offered Rethabile seats on its own board to help bring the airlines closer together.
Comair's share issue comes as its finances are recovering from a bruising domestic fares war. Net profits for its 1997/8 financial year to June showed net profits of R52 million on sales of R502 million. Profits for the latest year are being forecast to rise to R77 million.
Source: Flight International
