SAA issues Mango update

Dino D'Amore
By Dino D'Amore June 14, 2016 14:32

SAA issues Mango update

South African Airways SOC Ltd. said the airline subsidized its low-cost entity Mango Airlines by sub-leasing aircraft at a discount to market value, a move that may have given the carrier an advantage in the country’s highly competitive budget market.
The state-owned carrier sub-leased Mango all 10 of its aircraft “at a significantly discounted cost” while paying the leasing company the market rate, Johannesburg-based SAA said in a statement. The move was a “necessary investment” to support the low-cost entity, SAA said.

SAA’s comment on sub-leasing planes to Mango comes after last week’s resignation of the budget airline’s Chief Executive Officer Nico Bezuidenhout, who will become the head of FastJet Plc from Aug. 1. The company will announce an acting CEO “as soon as it is practically possible to do so” and will start a search for a permanent appointment.

The Democratic Alliance, South Africa’s largest opposition party, has stated it will now request that the Competition Commission start a probe into possible collusion between SAA and Mango, asking that the anti-trust regulator should investigate the total cost to the taxpayer of the arrangement and the losses incurred by unprofitable SAA as a result of the deal.

Dino D'Amore
By Dino D'Amore June 14, 2016 14:32