Wednesday, 3 July 2013

Interview: Erik Venter, Comair CEO

Comair to switch 737 options to Max

Comair is likely to renegotiate at least some of its eight Boeing 737-800 options into Max commitments, says chief executive Erik Venter says, as the airline begins planning for its next tranche of deliveries.

The carrier - which operates the British Airways and Kulula brands in South Africa - has a fleet of nine -800s, 10 -400s and seven -300s.

It received four -800s last year and is due to take delivery of another four ordered units in 2015, Venter says. That will in turn enable it to begin phasing out the -300s.

"They have reached the end of their rational economic life," he says of the -300s. "We will end up with a fleet of all -800s and -400s. And slowly but surely we'll migrate to all -800s eventually. But it will take a while."

Beyond the existing tranche of orders, Comair's eight 737 options are likely to be upgraded to the re-engined Max, he says.

"We will be having some talks with Boeing negotiating around those [options]," says Venter. "I suspect they will probably become 737-800 Maxes.

"What we've typically done is had options on a number of aircraft beyond our immediate order, so that we can flex to whatever the market does."

Long-term commitments are a "nightmare" when economic conditions change, he adds.

While it is "too early" to discuss financing arrangements for Maxes, Venter admits that Comair is reviewing its historic preference for US Export-Import Bank guarantees.

"The initial intention is still to go with Ex-Im backed funding [for the upcoming -800s], but it depends," he says. "The new Aircraft Sector Understanding has resulted in the cost of Ex-Im guarantees going up dramatically, so it's becoming worth our while to investigate things like corporate bonds as an alternative."

Comair also plans to purchase three of its leased -400s in the near future, says Venter. The airline owns the majority of its fleet, but it has leases on six -400s and five -800s.