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Tensions growing between SAA, Mango

Aug 04 2016 16:07

Johannesburg - The state's low-cost airline Mango has a new boss at a time of growing pressure on both Mango and parent airline South African Airways (SAA), Netwerk24 reported on Thursday.

Nic Vlok has been appointed acting head of Mango in place of Nico Bezuidenhout, who resigned earlier this year.

The leaked report on South African Airways' financial performance for the quarter to end-June appears to indicate underlying tensions between Mango and SAA management.

The tension between the carriers relates especially to the way the relatively quiet flight route between Johannesburg and Port Elizabeth is being managed.

According to the report, SAA initially planned to stop operating flights between Johannesburg and Port Elizabeth, and for Mango to take over the route. It was later decided that SAA's withdrawal from the route would be gradual, but it seems Mango had - without consulting SAA - placed extra flights on the Port Elizabeth route.

According to the leaked report, SAA is evaluating the possibility of offering only one flight less to Port Elizabeth on some days; however, abandoning the route completely is not recommended, as it contributes more than R180m a year to income from passengers using it as a connecting flight to other destinations.

It seems many corporate customers were not comfortable with Mango's service on the route, and said they would rather move to British Airways or another competitor if SAA does not fly to PE any more.

The report shows Mango achieved a turnover of R472m in the first quarter, 1% less than the R477m achieved a year ago. Its planes were 81% full in the period, compared with 82% the year before and compared with SAA's capacity of 74% on domestic routes.

According to Mango, Vlok is a highly knowledgeable and experienced professional with 35 years’ experience in aviation. Vlok was also the acting head when Bezuidenhout was acting CEO of the national carrier in 2014 and 2015.

Mango said the board would soon start its search for a new CEO.

Bezuidenhout has been the head of FastJet, an emerging African low-cost airline, since August 1.

After Bezuidenhout's resignation in June, SAA seemingly inadvertently revealed in a statement that it had enabled Mango to offer discounted flights through subleasing aircraft at discounted rates.

SAA issued the statement in reaction to Bezuidenhout's resignation. He had been CEO since Mango commenced operations ten years ago, and also twice acted as the CEO of SAA, as stated above.

READ: Fastjet names Mango's Nico Bezuidenhout as new CEO

In the statement SAA said it subsidised and subleased aircraft at a significantly discounted cost to Mango, implying that this was the actual reason for Mango’s success, and not Bezuidenhout’s competent management of the airline.

SAA has subsequently denied that this was the case, saying the planes it leased to Mango in the last ten years were leased at the full replacement cost.

READ: SAA scraps idea that it gave Mango cheap plane leases

Business Day meanwhile reported that suspended treasurer Cynthia Stimpel brought an urgent application in the Labour Court on Thursday to stop SAA from subjecting her to a disciplinary hearing.

Stimpel reportedly warned earlier that the tender of BnP Capital for the restructuring of the carrier’s South African debt and sourcing of funding of R15bn was too expensive. It was three times more expensive than the closest quotations received from banks like Absa and RMB, she told SAA finance chief Phumeza Nhantsi.

READ: BREAKING: SAA terminates services of BnP Capital

Stimpel was suspended on July 13 because she allegedly removed company documents in violation of the company's ethics and code of conduct.

* For this story and more business news in Afrikaans, visit Netwerk24.

mango  |  saa  |  nico bezuidenhout  |  aviation  |  airlines
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