‘The failure of Comair mirrors an aircraft crash’ – an insider's look

23 Jul 2024

Crash and Burn: A CEO’s Crazy Adventures in the SA Airline Industry is Glenn Orsmond’s insider’s tale of the South African airline industry over the past 30 years, and particularly the story of the dramatic collapse of Comair in 2022.

Glenn Orsmond, who was twice the CEO of Comair and the founder CEO of 1time, takes the reader on a wild ride through the ultra-competitive sector of low-cost airlines that boomed in this country after South African Airways’ (SAA’s) stranglehold on the skies was loosened in the 1990s.

Comair – which operated both Kulula and British Airways – and 1time were at the forefront of this new wave of airlines that saw domestic flying and tourism take off.

But after some incredible highs and lows, Comair crashed under Orsmond’s watch despite the company’s 75-year unblemished profit history.

The pandemic’s impact, the grounding of aeroplanes after a questionable regulator investigation and poor management decisions all contributed to its downfall.

Crash and Burn contains tales of industry legends and innovation, but also of competitors trying to gut each other, battles between pilots and accountants, unions and bosses at loggerheads, and warfare between shareholders and directors in boardrooms.

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So, what was the cause of Comair’s crash? Devotees of the popular National Geographic TV series Air Crash Investigation will understand that an aircraft crash never has a single cause. It is always the result of a cumulative chain of events.

For example, the chain of events resulting in an aircraft overshooting the runway and crashing might stem from poor pilot recruitment processes, inadequate simulator training of pilots, bad cockpit resource management, poor weather, management pressure to achieve on-time take-offs, tailwinds, wind shear and a wet runway.

The key to avoiding accidents

The key to avoiding an accident is to recognise that you are in a calamitous chain when it is being formed – then to break the chain by changing direction. In the example above, breaking the chain could mean a go-around – aborting the landing attempt and circling before trying again. If the pilot learns of a problem after take-off, he could opt to return to base instead of continuing, or a worried engineer could refuse to sign off the return of an aircraft into service.

Accident investigators always need to get to the root cause of each accident to discover the first event in any chain that led to the crash. If the root cause, the first link in the chain, can be avoided then the subsequent links do not arise.

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The failure of Comair mirrors an aircraft crash. The many links in the long chain of events that led to the airline’s failure have been set out in the previous chapters. In no particular order, these self-induced events included poor company culture, inertia, complacency, arrogance, a flawed diversification strategy, runaway costs, excessive debt, poor fleet decisions, squabbling shareholders, a flawed rescue plan, the Boeing Max deal and entitled employees.

All of these eroded Comair’s foundations and their effects were exacerbated by greedy bankers, intransigent labour, rigid labour laws and a flawed business rescue process in South Africa, which makes success unlikely.

Read more: The Storyteller of Riverlea – read an excerpt from ‘Chris van Wyk: Irascible Genius’, a memoir by his son Kevin van Wyk

By the time it hit do-or-die, Comair was well into the calamitous chain of events and taking a battering from severe external shocks. When faced with these developments over which it had no control, it had neither the solid financial foundation nor the strong company culture to deal with them.

These external shocks included higher fuel prices induced by the Russia-Ukraine war, South African Airways not paying Comair the R750 million anti-competitive claim, the four Covid-19 waves that cost R430 million, British Airways reneging on its R70 million debt and finally the politicised CAA grounding that added the final R120 million nail in the coffin.

Yet other airlines have faced similar or bigger challenges and survived. Airlink has survived serious accidents and temporary groundings, as explored in the previous chapter.

FlySafair survived a year-long delay in commencing operations as well as the same Covid-19 and fuel price shocks that hammered Comair. Why did FlySafair and Airlink survive and continue to prosper while Comair crashed?

Root cause of Comair’s downfall

It would be convenient to blame Comair’s crash on the external shocks. They definitely contributed, but it was the self-induced management actions that started and continued the chain of events. In common with all business failures, the root cause of Comair’s downfall was poor management, which ignited the chain.

The first link in the chain, the root cause, was forged about 10 years earlier when Comair tossed out two core guiding principles: to protect cash and to maintain lower costs than its competitors. This book outlines how Comair grew and prospered while governed by these core principles. Management failed when it tossed out the recipe that had provided the solid bedrock foundation for Comair’s success over 50 years.

Read more: ‘The Dirty Secrets of the Rich and Powerful’ — examining patent issues in SA’s healthcare system

Once the root cause took hold, it ignited further links in the chain that followed rapidly as the company steadily increased costs, eroded cash, created internal inertia and took on excessive debt. The chain could still have been broken if Comair management had recognised that the company was many portentous links into the chain and that a crash was looming. As is common in many businesses, however, these links are masked during the good times, so instead of reversing course Comair management continued down the same path.

The crash became inevitable once external disruptions arrived in rapid succession, hitting a company without a solid financial foundation and without the corporate culture needed to overcome the problems. While business rescue delayed Comair’s crash, the flawed nature of the process coupled with dysfunctional management made it impossible to bounce back – most notably near the end with Covid-19 and a hostile regulator. The cupboard was bare, the emperor had no clothes and the edifice crumbled.

After we resumed operations under the business rescue practitioners, we properly identified that we were in the chain and achieved notable successes in trying to break it by reducing the cost base (particularly the head count), exiting the Boeing Max deal, increasing crew and aircraft efficiencies and cancelling excessive aircraft leases.

Cumulatively, these actions reduced the airline’s break-even load factor from 86% pre-Covid to 70% at the time of Comair’s demise. By this time, though, the airline was skidding off the runway. Applying the brakes was simply too little, too late. The collapse of Comair was tragic and avoidable, and there was no happy ending. DM

Crash and Burn: A CEO’s Crazy Adventures in the SA Airline Industry by Glenn Orsmond is published by Jonathan Ball Publishers (R270). Visit The Reading List for South African book news, daily – including excerpts!

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