A second South African carrier, Sun Air, is planning to seek a listing on the Johannesburg stock exchange. Comair, which operates under a franchise agreement with British Airways, listed in July and Sun Air now plans to follow suit in around 2000.
Managing director Johan Borstlap says that he will "strongly recommend" the flotation to the airline's board, arguing that the carrier needs cash to keep its expansion rolling.
Since Sun Air's privatisation two years ago, which left Comair holding a 25% stake in its rival, the carrier's performance has been relatively strong. The airline expects to show a net profit of R30 million ($5 million) in the current financial year, more than double the 1997/8 result.
The carrier has also been showing strong traffic growth, with monthly passenger figures up from 30,000 two years ago to 80,000, and has a lucrative niche on the premium "Golden Triangle" market between Johannesburg, Durban and Cape Town. Borstlap wants to cultivate such traffic, with the aim of reaching 70% business travellers. "But we are in no way taking on South African Airways," he says. "We are the corner store that knows its customers by name, not a hypermarket."
The flotation, he says, is expected to raise around R1 billion, provided that stock markets weather the present turmoil. The cash will be used to fund fleet investment, not only for expansion but to replace the older stage 2 aircraft. A government crack-down on noise is expected by 2000.
"Also, the domestic market is saturated. If our business is to grow we are going to have to expand regionally, probably into Angola, Mozambique, Namibia, Zimbabwe and Zambia. For that we are going to need new aircraft," he says.
Source: Airline Business
