By Banele Ginindza for IOL
The South African National Taxi Council (Santaco) has not been derailed from its aspirations in the aviation sector by the recent rebuff from Mango Airlines business rescue practitioners (BRPs) and is actually looking at its options after consultations with its constituency, officials confirmed yesterday.
The organisation said it had initiated plans to enter the sector from as early as 2011, but was derailed by the downturn in the global economy and had taken on the Mango initiative as part of a broader strategy.
“A number of issues compelled us to take a step back even then. At that time we had not even dreamt that Mango would be up for sale, so the sale of Mango had presented us with an opportunity to remodel our entry into the industry,” spokesperson Thabisho Molelekwa said yesterday.
He said the organisation was not ready yet to fully comment on the Mango rebuttal or what strategy it would adopt to gain a foothold.
Aviation experts said over the weekend that with Santaco’s liquidity, the R820 million price tag for Mango was over the top and that kind of muscle would enable a whole start up of an airline as the trend amongst operators was to lease aircraft instead of outright purchases.
“The aviation industry has changed a lot since the pandemic and there are no guarantees for new entrants,” Molelekwa said.
Molelekwa would not be drawn to comment if Santaco’s review of the BRPs decision included a legal challenge, saying the organisation still had to report to its constituency, which is taxi operators countrywide.
Sources close to Santaco said the organisation was still keen to get a foot into the aviation industry, but that some advice it had obtained pointed to various options that were being considered.
BRPs, led by Sipho Sono, informed Santaco that their bid for Mango was unsuccessful for the transport organisation with more money than dust.
“The BRP of Mango evaluated all expressions of interest received in relation to the proposed transaction in accordance with the evaluation criteria and principles set out in the Bid Process Letter. After careful consideration, we regret to inform you that Santaco Services was not selected as a shortlisted bidder and accordingly shall not progress to the second phase of evaluation for the Proposed Transaction. On behalf of Mango, we again wish to reiterate our appreciation of your interest in the Proposed Transaction and wish you the best with your future endeavours,” Sono has told Santaco.
Industry experts said Santaco was being rebuffed to save the South African Airways (SAA) blushes of facing competition from a well muscled organisation which would ultimately gain the upper hand with better organisation.
“There is going to be war, those taxi guys have the muscle to take on SAA which is why the Minister (Pravin Gordhan) is not going to allow opposition to get into the industry,” an industry player said.
By Sifiso Zulu for EWN
State-owned airline Mango is still waiting to hear from the Department of Public Enterprises about exactly when it will receive a cash injection amid concerns that salaries may not be paid.
The airline said it would be able to communicate on Tuesday about what lay ahead while there were reports that it would soon go into business rescue.
About 700 employees at Mango stand to be affected by whichever decision is reached.
Government has delayed much-needed funding for Mango, promising on a number of occasions that money would be paid over.
Aviation experts say the horse had already bolted at Mango and it would take immediate cashflow to make up for the financial losses.
Aviation economist Joachim Vermooten said Mango was already faced with financial problems, which were made worse by the COVID-19 pandemic.
“You can’t maintain these kinds of operations. You really need to restructure and take it down to whatever you can learn.”
“Mango still has an important role in the aviation industry, particularly to provide SAA with what we call domestic connectivity,” said aviation expert Guy Leech.
Meanwhile, trade union Numsa said the department was to blame for the financial challenges at Mango.
By Sumit Rehal for Simple Flying
FlySafair has expressed an interest in purchasing fellow South African carrier Mango Airlines, if it is put up for sale. The airline’s Chief Executive Officer Elmar Conradie confirmed the potential move on Tuesday.
IOL reports that FlySafair’s management approached South African Airways’ administrators about a possible acquisition of the low-cost carrier. However, Conradie made it clear that he is only interested in Mango and not any other aspects of its struggling parent company.
Mango was founded in 2006 and operates mostly domestic routes within South Africa. However, it does serve Zanzibar, the is a semi-autonomous region of Tanzania.
Conradie affirmed that a purchase of SAA Technical, which specializes in aircraft maintenance would not make sense. This is because his carrier is already serviced by Safair Operations (Pty) Ltd, its own parent company.
South African Airways has been going through a dire period as of late with struggling financials. Last month, South Africa’s National Treasury shared that it will provide a $1 billion bailout for the country’s flag carrier. However, this decision has been met with criticism by many members of the nation’s public due to the amount of funds being spent on the airline.
Meanwhile, FlySafair has been seeing great progress since it commenced operations six years ago. It currently flies to seven destinations across South Africa and it continues to increase its routes and frequencies.
Moreover, it is set to announce a new service to Durban from Johannesburg next week. Meanwhile, it has been slowly upgrading its fleet of 17 aging Boeing 737-400 aircraft to updated 737-800 models.
While the novel coronavirus outbreak is having a massive shift in the global aviation industry, Conradie claims that it has not had an impact on his firm’s operations as of yet. In fact, FlySafair is expecting capacity to increase by 15 percent this year and is yet to see any negative results on bookings amid the spread of the virus.
Several other airlines have been forced to cut many of their flights by the day due to the drop in demand. Additionally, some carriers have had to suspend services due to governmental policy, such as Kuwait’s recent decision to close its intentional airport.
South Africa currently has 16 active cases. However, with the World Health Organization now classing the outbreak as a pandemic, airlines across South Africa could start to feel the brunt of it. Ultimately, South African Airways will be keeping a close eye due to its existing struggles.
Passengers on a recent Mango flight from Johannesburg to Cape Town were terrified when the aircraft suddenly nosedived, forcing the pilot to make an emergency landing in Johannesburg. A subsequent investigation into the incident has highlighted the extent of South African Airways’ problems.
- A faulty part was fitted to the aircraft by SAA Technical
- SAA admitted that it has been infiltrated by an international criminal syndicate
- The syndicate has supplied the company with suspicious aircraft parts and looted “hundreds of millions of rands”
- Defective parts cause incidents such as the nosedive of the Mango Boeing 737
- Comair, which operates British Airways in South Africa, has ended its relationship with SAA Technical
- Airlines have been grounded for such activities
- The government has pumped almost R50-billion into the airline in the last decade