Shares in listed airlines group Comair, the British Airways operator in South Africa, continued to gain ground in early trade on Thursday, climbing 4,2% or 7 cents as the company continued to reap the benefits of the damaging six-day strike at rival South African Airways (SAA), despite news that the strike is set to come to an end.
At 11.10pm, Comair was trading on the JSE at R1,72, from R1,65 at Wednesday’s close, with 432 000 shares having traded so far. Since Friday, when the SAA strike began, Comair shares have skyrocketed 21% or 30 cents.
In the short-term, Comair has benefited from the spillover effects from the strike by SAA cabin crew and ground crew, which has seen about 75% of all SAA flights either cancelled or delayed in the past six days. It has accommodated as many SAA passengers as possible on its own flights, while it also added additional non-scheduled flights, thus getting an unexpected boost to its revenue line once it is compensated by SAA.
However, analysts have said that rather than this short-term effect, the rise in the Comair share price has largely been driven by expectations of sustained higher revenues over the medium- and even longer-term, as more passengers, particularly lucrative business travellers, opt to use air carriers other than SAA, given the damage caused to the state-owned airline’s reputation by the strike.
An in-principle agreement between SAA management and unions representing cabin crew and ground staff for a compromise 6% wage increase was reached late
on Wednesday and is expected to be signed on Thursday. – I-Net Bridge