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Court rules in favour of Comair in SAA anticompetition case

The South Gauteng High Court has ruled in Comair’s favour in a case initiated against SAA 14 years ago over the national carrier’s anti-competitive travel agent incentive schemes.

In terms of Wednesday’s judgment, Comair was awarded R554-million plus interest at 15.5% on this amount, which will be capped at the value of the award, plus costs, amounting to about R1.16-billion in total.

The scheme, which was in place from 2001 to 2006, was designed to keep travel agents loyal to SAA, violating the Competition Act.

Last year Nationwide, which also sued SAA on the same issue, was awarded R171.5-million plus interest in damages.

Comair chief executive Erik Venter said: “This has been a long and complex case. It has taken 14 years to get to this point and we are pleased that a judgment has now been handed down. 

“We pursued this case because a dominant carrier had abused its position in the market to the detriment of its competitors, their shareholders and employees, and the flying public.”

Comair said the judgment is subject to appeal by both parties and shareholders should be conscious of this when trading in the company’s securities.By mid-afternoon trading, Comair’s share price was already up 15.05% to R5.81.

Legacy matter
SAA spokesperson Tlali Tlali said on Wednesday that the airline has taken note of the judgment involving SAA’s anti-competitive behaviour from 1999 to 2005.

“The airline’s counsel will study the judgment and will advise the company on how to proceed,” said Tlali. “The airline will not debate any merits of the case in the media.” 

He said this was case a legacy matters, dating back to the period between 1999 and 2005 and implemented by managers who have sine left the company and “new business management processes were since introduced to ensure compliance with all relevant prescripts”.

Tlali said the team is focused on turning the business around to ensure that SAA is commercially viable, operationally competitive and financially self-reliant in the shortest time possible.

“A number of interventions will be implemented and others have already been initiated aimed at ensuring positive business improvements take place in a matter of months,” said Tlali.

Comair announced on Tuesday that its unaudited interim results for the six months ended December 31 2016 saw revenue growth of 6% as a result of a recovery in yields, but without any increase in volumes.

Profit after taxation for the period was R199-million compared to R84-million during the prior period. Earnings per share and headline earning per share were 42.8 cents (18 cents during the prior period).

Following on the strong cash earnings for the interim period a gross interim cash dividend of seven cents per share (compared to five cents during the previous period) was approved for ordinary shareholders. The dividend was declared out of income reserves.

Growth in the contribution from Comair’s non-airline segment was strong. In the meantime, Stuart Cochrane, the executive manager of business processes at ‎Comair, said he can confirm that Comair has received a request from the government of Botswana to consider submitting an expression of interest to take over Air Botswana.

“We are currently reviewing the details of the potential opportunity before we make a decision,” said Cochrane. – Fin24

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Carin Smith
Carin Smith
A business journalist at Fin24.com.

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