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SAA group effectively admits to subsidising Mango

13th June 2016

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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In its reaction to the announcement that Mango CEO Nico Bezuidenhout had resigned and was going to become CEO of low cost carrier fastjet, South African Airways (SAA) has admitted to having effectively subsidised Mango, its low cost airline subsidiary. (SAA issued its response in a press release on Saturday.)

“As an initial investment to subsidise the start-up of Mango Airlines, SAA sub-leased 10 aircraft, at a significantly discounted cost to Mango Airlines, while continuing to pay the market-related premium to the lessor,” stated the group in its press release. “The aircraft are still in use and comprise the whole of Mango’s fleet.”

“SAA understands and accepts that this is a necessary investment and a demonstration  of shareholder support towards an entity it has exclusive shareholding over,” it added. Furthermore, “SAA materially contributed to the much celebrated financial performance of Mango Airlines and will continue to support the airline should the need so arise.”

The SAA statement affirmed that Bezuidenhout had freely resigned from Mango and that his departure had nothing to do with internal investigations being carried out across the SAA Group. “SAA confirms that one of the investigations currently under way relate [sic] to the manner in which routes were removed from SAA and allocated to Mango Airlines at the expense of SAA, effectively hurting SAA’s commercial interests and financial performance.”

Nevertheless, the State-owned airline group “remains committed” to its low cost subsidiary.  It “expects” the Mango board to appoint an acting CEO as quickly as possible. It also wished Bezuidenhout “well in his future endeavours”.

Edited by Creamer Media Reporter

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