Johannesburg - Mango Airlines leased planes from South African Airways at market-related rates, its chief executive officer said, denying a statement by the budget carrier’s state-owned parent that it provided aircraft at a “substantially discounted cost.”
“It’s outright, straightforward, not true,” Nico Bezuidenhout, 39, said in an interview on Wednesday at Bloomberg’s Johannesburg office. Mango pays market-related lease rates and since 2010 has negotiated new deals directly with leasing companies, he said.
SAA said June 11 it sub-leased Mango all 10 of its Boeing 737-800 aircraft at a discounted cost while paying the leasing company the market rate, an arrangement that would potentially have given the budget carrier an advantage in South Africa’s highly competitive market.
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The move was a “necessary investment” to support the low-cost entity, SAA said. The statement was part of a response to the resignation of Bezuidenhout, who will become the head of Africa-focused carrier FastJet from August 1.
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“SAA must please substantiate any of these claims,” Bezuidenhout said.
SAA has been surviving on government debt guarantees and last posted a full-year profit in 2011.
Mango, which connects South African cities including Johannesburg, Cape Town and Durban, was profitable in the year through March 2015 and made a loss in the most recent fiscal year, Bezuidenhout said.
The Democratic Alliance, South Africa’s largest opposition party, will request that the Competition Commission start a probe into possible collusion between SAA and Mango , the DA said on Monday.
BLOOMBERG