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Comair awarded R1.1bn in final competition settlement with SAA

Feb 15 2019 16:25
Carin Smith, Fin24

Comair [JSE:COM], operator of kulula.com and British Airways in SA, advised shareholders on Friday that it has entered into a full and final settlement agreement with South African Airways (SAA) regarding a case relating to SAA's incentive schemes for travel agents from 14 years ago.

Comair had initiated the case against SAA because it was of the view that these incentive schemes for travel agencies were anti-competitive in nature.

According to Comair, the scheme was designed to keep travel agents loyal to SAA, therefore, allegedly being in breach of the Competition Act. The scheme was in place from 2001 to about 2006.

The Supreme Court of Appeal has now made the settlement agreement between the two airline companies an order of court.

According to Comair, in terms of the settlement agreement, SAA will pay Comair a total settlement amount of R1.1bn plus interest as from the end of February until the end of July 2022 - or earlier if SAA elects to do so.

In addition, SAA will pay Comair's taxed legal costs incurred to date.

Fin24 reported in February 2017 that the South Gauteng High Court had ruled in favour of Comair in the case.

In terms of this judgment, Comair was awarded R554m plus interest at 15.5% on this amount, which would have been capped at the value of the award, plus costs, amounting to approximately R1.16bn in total. The matter was then taken on appeal.

SAA said in a statement that the finalisation of this case marks the conclusion of "one of the disappointing legacy matters that dragged on for far too long and was overdue".
 
SAA spokesperson Tlali Tlali said the current airline leadership at board and executive management level is committed to closing all legacy issues and to start on a clean slate.

"This case, was one of the unnecessary and yet protracted legal battles which only served to maximise risk exposure for the airline. The SAA/Comair dispute could and should have been handled differently," said Tlali.
 
"The current SAA leadership will act decisively on matters that must finalised to ensure that there is mitigation against any possible liability that may arise from any legacy issues."
 
He said the finalisation of this matter is a deliberate decision by SAA, to clean up and focus on transforming the airline as it undertakes the journey towards financial sustainability.

"The airline must execute its strategy without being distracted by legacy issues in order to reach a break-even point by the end of financial year end 2021," said Tlali.
 
"SAA is on track in implementing its turnaround strategy, it is making good progress and has already met a number of targets it has set in the implementation path."

saa  |  comair  |  competition  |  aviation  |  court  |  airlines
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