Comair has released what CEO Erik Venter calls pleasing results for its first half, considering the environment of low growth in which the company operates kulula.com and British Airways.
The results should have been much better. There are several reasons for that, including a reluctance among local investors to recognise the value in share trading at a price:earnings ratio of six, while its international counterparts traded at between 15 and 20.
That is likely to change as investor confidence improves along with SA’s economy, but when Venter refers to a "constrained environment" this should be read as code for South African Airways (SAA).
He politely skirts naming SAA, with which it has continuing litigation about up to R1.9bn in damages over competition issues, but the fact is, the state-owned SAA operates as a monopoly and that queers the pitch for any carrier not in the SAA stable. It means that no matter how efficient and competitive Comair is, a properly run SAA would hold all the cards.
Except SAA is not run properly and is unlikely to improve much while it is state owned. This is what gives Comair the edge and the room to grow its market share as SAA stumbles from bail-out to bail-out, yet Venter remains adamant that SAA should be privatised.
In the event of such a shake-up, everyone would gain, passengers in the first place, but also the wider industry.
The biggest winner, though, would be Comair. This is because its fleet is newer and better designed to service smaller regional destinations that will expand the market when SA’s economy catches up with the rest of the world, while a privatised SAA languishes with an archaic culture, huge debt and a fleet it cannot update.
Shareholders that attend agri-services business Kaap Agri’s annual general meeting in Malmesbury today might enjoy an intriguing event.
The meeting more or less coincides with the release of a circular proposing a merger between Kaap Agri’s rival Overberg Agri and agri-investment company Acorn.
The circular presents ample reasons why a merger of these two entities — with a possible JSE listing in the offing — makes commercial (and strategic) sense for the longer term.
But the first critical murmurings of the proposed merger have been voiced.
While Overberg Agri’s management appears to back the merger proposals, older investors will know just how suspicious shareholders in former agricultural co-operative businesses can be of the "corporate suits" in investment companies.
Readers may remember the resistance from farmer shareholders when PSG/Zeder tried to usher KWV towards Pioneer Food’s Ceres Beverages.
It would be surprising if the Overberg Agri matter does not come up for discussion at the Kaap Agri meeting. With Kaap Agri on an aggressive strategy to increase its operational footprint, it would be difficult to imagine shareholders not wanting to know if the company was interested in making an offer for Overberg Agri.
Like Kaap Agri, Overberg Agri has a retail presence, a fruit packaging segment, grain storage and fuel sales. Admittedly, it seems the Overberg Agri and Acorn transaction is already a long way down the road. So any punting of a rival bid for Overberg Agri suddenly materialising might well be wishful thinking.
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