South African private-sector airline group Comair announced at the end of last month, through a Stock Exchange News Service release at the JSE, that it was acquiring the “shares and claims” of Star Air Maintenance and Star Air Cargo. The deal involves paying the sellers R75-million, as well as profit share payments.

“Comair has acquired the assets to extend its diversification strategy into the leasing of aircraft, while also providing Comair with the expertise and systems to establish a base for heavy maintenance checks on its fleet of [Boeing] 737-800 aircraft,” stated the release. Comair’s fleet is composed entirely of different versions of the Boeing 737 airliner. Star Air Cargo’s much smaller fleet is, according to its website, also made up only of 737s.

Star Air Maintenance provides maintenance for Star Air Cargo’s own fleet, as well as for third-party operators. Star Air Cargo is actually an aircraft leasing company, specialising in short- and medium-term leasing of both passenger and cargo aircraft to operators in Africa. It holds a Part 121 domestic and international aircraft operating certificate.

The profit share payments, which form part of the deal, are capped at R250-million. The R75-million will be paid in three tranches. The first tranche will be paid five business days after the fulfilment of all the conditions precedent for the transaction (the completion date) – this will amount to R30-million. The second tranche, of R22.5-million, will be paid on the first anniversary of the completion date. The third tranche, also of R22.5-million, will be payable on the second anniversary of the completion date (subject to certain conditions relating to the financial performance of the acquisitions).

The net assets of the two entities being bought by Comair totalled R52.6-million on February 28, 2018 (the date of the last audited financial statements). Their audited profits after tax for the year ending February 28, 2018, came to R23-million.

Only a couple of days earlier, Comair also announced that its outgoing CEO, Erik Venter, who will leave the company at the end of July, will be replaced by two joint CEOs. (Comair has had joint CEOs before.) They are Wrenelle Stander and Glenn Orsmond. Stander, who is currently Comair’s airline division executive director, will become joint CEO: airlines, while Orsmond, whose most recent job has been CFO of Star Air Cargo, will be joint CEO: non-airline business and financial services.

Stander had previously been MD of the Air Traffic and Navigation Services company, deputy CEO of the South African Civil Aviation Authority, and chief director: aviation and maritime regulation: Sasol Gas. Orsmond served as Comair’s FD (1995 to 2003) and subsequently as FD at Sun Air; cofounder, group FD and group CEO of budget airline 1Time; CEO of Jetworx Aircraft Maintenance; and CFO of Star Air Cargo. Between them, Stander and Orsmond have 60 years’ experience in the aviation industry.

Comair’s airline business comprises the British Airways operation in South Africa and the Kulula low-cost airline. The group’s other businesses cover hospitality and tourism brands, a training academy (with many foreign customers) and a technology support and solutions enterprise focused on the aviation, travel and tourism sectors.

“The new CEOs’ task will be to optimise our airline business performance while also building upon the diversification strategy that has been central to the group’s growth in stagnant market conditions,” said Comair board chairperson Piet van Hoven.

“The group is less reliant on the notoriously volatile airline businesses, which are so dependent on the performance of the broader economy. “These other businesses now contribute 30% of profit.”