Bloomberg News

Comair Orders Boeing 737 Max 8s to Become First African User (2)

March 19, 2014

British Airways franchisee Comair Ltd. (COM) ordered eight Boeing Co. (BA:US)’s 737 Max 8 airliners in a deal that will make the carrier the first African customer for the re-engined narrow-body model.

The planes, with a combined list price of $830 million and offering 14 percent lower fuel consumption than current single-aisle models, will be delivered from 2019 through 2021, the Johannesburg-based airline and Chicago-based Boeing said today.

Comair’s 25-plane fleet is comprised of earlier versions of Boeing’s 737, the world’s most widely used airliner. The purchase of the 737 Max 8s, which will be equipped with the Leap-X engine from General Electric Co. (GE:US)’s CFM International venture with Safran SA (SAF), are part of Comair’s effort to cut jet-fuel usage while adding destinations to a route network serving southern Africa and Indian Ocean islands.

“The aircraft is the best way to manage fuel consumption,” Comair Chief Executive Officer Erik Venter said in an interview in Johannesburg. The fuel bill will be about 1.8 billion rand ($170 million) this year, and “we have to stay ahead of costs.” Since 2005, Comair has cut fuel consumption 28 percent and wants to deepen the reduction to 42 percent by 2020, he said.

Comair rose 2.5 percent to 4.10 rand at the close in Johannesburg. The stock has gained 30 percent this year, valuing the company at 1.81 billion rand.

Investec Financing

The new purchase adds to an eight-plane order for the 737-800 model that Comair placed with Boeing in 2011, with the remaining four to be delivered by 2016. Investec Aviation Finance acted as financier for the 737-800 purchase.

Comair will send a request for funding proposals for the 737 Max 8 order to domestic and international banks by end of the year, Venter said.

The Max 8 will have a seat capacity of 189, according to the airline. The 737-400s that the model is replacing are configured with 132 seats when Comair is flying routes on behalf of the International Consolidated Airlines Group SA (IAG)’s British Airways unit, the carrier said. Comair also operates the low-fare Kulala brand.

The company is coping with a declining currency and sluggish growth in Africa’s biggest economy.

“It’s expensive now because of the weak rand, which impacted our costs,” as 48 percent of spending is in pounds and U.S. dollars, Venter said. “The market has become a little bit frozen right now because of pricing.”

Last year, the airline increased fares 17 percent while the rand fell 22 percent.

“That’s why we need to bring in more efficiency to cut the cost,” the CEO said.

To contact the reporter on this story: Kamlesh Bhuckory in Johannesburg at kbhuckory@bloomberg.net

To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Tom Lavell, David Risser


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  • BA
    (Boeing Co/The)
    • $120.38 USD
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  • GE
    (General Electric Co)
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