Comair debacle showcases the importance of good corporate governance

This week Comair made the decision to voluntarily suspend operations pending receipt of additional funding.

However, while Comair’s business rescue practitioners were trying to keep the lights on, somewhere within the organisation, the decision was made to push ahead with a sale that offered customers 30 percent off of flights from 31st May to 30th November 2022.

Customers now need to go through the arduous process of requesting a refund via email.

However, questions have been raised about Comair’s sale and subsequent temporary shuttering of operations.

“At this stage, it is not clear whether this was simply a disastrous example of the left and right hands not knowing what either was doing or an indication of a more serious ethical breach. But either way, irate customers are putting the blame on the board and the CEO,” explains chief executive officer for the Institute of Directors in South Africa (IoDSA), Parmi Natesan in a press release.

The IoDSA CEO paints two scenarios, neither of which are very good.

The first is simply that the Comair CEO and their executives simply weren’t clued up as to the dates of the sale Kulula was hosting. While this lapse is understandable, Natesan points out that given Comair’s woes in the past, the C-suite should’ve been more hands on and aware of operations.

While this would contravene the King IV Report on Corporate Governance, it’s not as severe as the next scenario.

The second scenario, if it is found to be the case, could spell trouble for Comair’s C-Suite. In this scenario the Comair board knew the sale was planned and allowed it to go ahead to drum up cash flow. This is rather unlikely, however, as Comair has been in business rescue for sometime now and hosting a sale before shuttering operations is going to draw eyes to your company.

If this is the case, it would be serious trouble for Comair.

But worse than the King IV contraventions, is the reputational damage Comair has sustained.

“Already on social media one can see people questioning the ability of Comair to operate successfully again,” says Natesan. “Whatever the truth of the matter, one thing is clear: Comair has aggravated one of its most important stakeholder groups—its clients—and if it does return to service, the board will have its work cut out to repair a severely damaged reputation alongside all the other challenges it faces.”

Speaking with MyBroadband, Comair said that the sale which has caused the uproar was organised and implemented a week ago.

“Once it became evident that our operations would need to be suspended, we closed the sale,” Comair said. “Importantly, Comair does not receive the cash from sales until the air service is provided, so the cash is safe for passengers to claim a refund.”

We doubt this will be the last we hear of this, but Comair is going to need to stoke some good will should it resume operations.

[Image – CC 0 Pixabay]




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