Comair, the once-thriving operator of Kulula and British Airways (BA) in SA, is set to shut up shop permanently after running out of cash, a development that could push local airline ticket prices to record highs and stall the recovery of the tourism industry and the broader economy.

A Business Day report says the airline operator – once the gold standard on the local aviation scene, going more than seven decades without making a loss – accounted for 40% of airline capacity.

It initially announced last Tuesday that it had been forced to suspend all its flights with immediate effect due to a cashflow crisis.

Yesterday, the airline’s business rescue practitioners said efforts to raise the required funding, which was not disclosed, had fallen flat.

This forced the company, which employs about 2 000 workers, to initiate the process to voluntarily wind up its operations.

‘We did our utmost to secure the funding, but when we were unable to do so, had no option but to lodge the application (to convert business rescue proceedings into liquidation proceedings). It is an extremely sad day for the company, its employees, its customers and SA aviation', said Richard Ferguson, one of Comair’s business rescue practitioners.

Under the process, employees and customers who held bookings or were owed refunds will now become creditors of the company.

Comair’s new owners had been pushing hard for funding since January to make up for about a R100m loss in revenue arising from travel bans in the wake of the discovery of the Omicron variant.

The Business Day report says under the approved business rescue plan, the new owners – including former directors Martin Moritz, Pieter van Hoven and Rodney Sacks, and an investment vehicle, Luthier Capital – had agreed to inject R500m into the group in return for virtually all of the company.

Additional funding of R1.4bn – comprising R600m in new borrowing and R800m in deferred debt – was due to be secured from banks for this plan to be carried out.

Joachim Vermooten, an independent aviation analyst, said airline ticket prices were likely to shoot up as a result of reduced supply, which could have a knock-on effect on the broader economy.

‘It’s a great tragedy. The airline has been around for many years and withstood a number of so-called black swan events,’ Vermooten said.

Full Business Day report