Comair investors not getting too excited about SAA’s R1.1bn
After an initial bump when competition case against SAA was settled, Comair share price has barely moved
Judging by the Comair share price (https://www.sharenet.co.za/v3/quickshare.php?scode=COM) it seems that not many investors are expecting SAA to deliver on its R1.1bn court-ordered settlement. The payment was the outcome of a long, drawn out competition case dealing with SAA’s travel agent incentive scheme, which the Competition Tribunal eventually ruled was anti-competitive. This ruling opened the way for Comair to institute its own legal action for damages against the national airliner.
The money will come in very handy and will help to counter the effect of tough trading conditions on cash flow and the bottom line. In a recent update the company said the R1.1bn award would see earnings per share for the year ended June increase by more than 20%. Without the award earnings are expected to be down by more than 20%.
The news produced a bump – but not that significant – in the share price from R3.72 to R4, where it has stayed. While the share price increase is not to be sniffed at, the current rating may reflect investors’ general concern about equities in a tough economic environment...