Insider’s view on how Kulula operator Comair crashed and burned

In his new book, Crash and Burn, former Comair CEO Glenn Orsmond gave a brutally honest account of the airline’s dramatic collapse in 2022.

Orsmond is an airline industry veteran who served as Comair’s chief executive and founded the low-cost airline 1time.

Comair was founded in 1946 when it began charter operations. Scheduled services between Johannesburg and Durban began in July 1948.

In 1978, Dave Novick negotiated a management buyout of Comair’s aviation assets. In 2001 Kulula.com was established.

South Africans knew Comair as the company behind Kulula and British Airways in South Africa. It was a core part of the local airline industry.

However, two years ago, it all came crashing down after Comair was declared insolvent and beyond saving.

In his book, Orsmond shares his views on what went wrong at Comair and led to its collapse in 2022.

He ran the airline during its collapse and blamed the pandemic’s impact, grounding of aeroplanes, and poor management decisions for its downfall.

Competitors also tried to gut each other, there were battles between pilots and accountants, and warfare between shareholders and directors.

Orsmond takes readers through the journey culminating in Comair’s announcement in June 2022 that it could not continue operating and was beyond rescue.

“Regrettably, the requisite funding could not be raised for the company to continue with its operations,” the company said at the time.

“Accordingly, the company’s joint business rescue practitioners give notice herewith that they no longer believe that there is a reasonable prospect that the company can be rescued.”

It shocked South Africans who have become accustomed to Kulula.com being the low-cost airline of choice for local travel.

It was nearly unfathomable that the South African aviation industry lost its most recognisable low-cost brand.

Many people blamed the impact of the pandemic and government lockdowns for Comair’s collapse. However, Orsmond said there was far more to it.

He told Classic Business’ Michael Avery that the company lost sight of the core principles that made Comair successful.

The company boasted a 75-year unblemished profit history because of three fundamental core principles.

• Always protect and build cash. It is not profits; it is cash.
• Always have lower costs than your competitors.
• Don’t take on excessive debt.

“When there are external shocks, the last man standing is always the one with cash,” Orsmond said.

When Orsmond left Comair in 2003 after serving as financial director, these three core principles were drilled into executives.

He credited three Comair directors—chairman Dave Novick, deputy chairman Martin Moritz, and MD Piet van Hoven—with ensuring these principles are entrenched at the company.

However, when Orsmond returned to Comair in 2019 as chief executive, these principles were trashed.

“Comair whipped out its cash by buying new Boeing 737 Max aircraft, and they have completely lost control of costs,” he said.

“Where an airline should break even with a load factor of 65% to 70%, Comair was breaking even at 88%.”

“No airline can achieve a load factor of over 80% in the long term. It all had to do with costs,” he said.

Orsmond said flying the new Boeing 737 Max aircraft was a vanity project because Comair wanted to portray itself as a global airline.

Comair eroded their cash, they lost control of their costs, and they were funding losses with excessive debt.

Apart from losing sight of the principles that made Comair and Kulula successful, the company was also plagued by infighting.

Orsmond said that for any company to succeed, it needs board and shareholder unity and good working relationships between managers.

However, Comair did not enjoy board and shareholder unity, which was partly to blame for its downfall.

He explained that sound decisions are not always made. Instead, decisions are often driven by personalities.

 “In the real world, investment decisions are not made on whether a deal makes financial sense,” he said. “Instead, it is whether one CEO likes another.”

He added that there was infighting between executives when they realised Comair was heading for a crash.

“Instead of having an executive team that worked together to fix the problems, we spent ten months squabbling with shareholder and board disputes,” he said.

He added that it was a wasted opportunity where the time could have been used to identify and address the challenges.

“You could see the crash looming, However, instead of everyone focussing on avoiding the crash, people squabbled over who gets what and who said what.”

“If reflected poorly on all of us. Me, the shareholders, and the Comair board,” the former chief executive said.

The last nail in the coffin was the South African Civil Aviation Authority’s (SACAA’s) decision to ground Kulula.com planes in March 2022.

“This decision was reached following an investigation into the recent spate of safety incidents at the operator,” the SACAA said.

“Comair operations experienced engine failures, engine malfunctions, and landing gear malfunctions in the past month.”

The CAA said Comair failed to produce satisfactory evidence that their systems can prevent and avert safety hazards.

Orsmond described it as a political decision which did not have a strong foundation or substantiating evidence.

He said airlines are not safe because of the Civil Aviation Authority. Instead, it is because airlines self-regulate. “At all times, Comair has been safe,” he said.

“The CAA was under a lot of pressure because of its own aircraft, which is used to provide oversight,” he said.

Their aircraft crashed, which was investigated by the Ethiopian authorities. “They drew up a long list of failures by the CAA,” he said.

It created concerns over aircraft airworthiness, whether the crew was trained, and whether pilot licenses were up to date.

These findings, which they have not accepted, put a lot of pressure on the CAA about its oversight related to safety.

Orsmond said grounding Comair was an attempt to divert attention from the CAA’s failings rather than true concerns about safety.