Independent Online

Thursday, August 18, 2022

Like us on FacebookFollow us on TwitterView weather by locationView market indicators

Nudging Santaco out of the running for low-cost airline Mango eases SAA’s competition fears

The elbowing out of taxi moguls Santaco as the preferred bidders for fledging airline Mango has raised more questions than answers, which some analysts have argued is a systematic elimination of competition for SAA, which has yet to confirm a collaboration. Picture: Karen Sandison/African News Agency (ANA)

The elbowing out of taxi moguls Santaco as the preferred bidders for fledging airline Mango has raised more questions than answers, which some analysts have argued is a systematic elimination of competition for SAA, which has yet to confirm a collaboration. Picture: Karen Sandison/African News Agency (ANA)

Published Feb 14, 2022

Share

Politics

THE elbowing out of taxi moguls Santaco as the preferred bidders for fledging airline Mango has raised more questions than answers, which some analysts have argued is a systematic elimination of competition for SAA, which has yet to confirm a collaboration.

Story continues below Advertisement

There are also questions surrounding the R820 million price tag for an airline that has no tangible assets.

Business rescue practitioners (BRP) led by Sipho Sono informed Santaco that their bid for Mango was unsuccessful, in spite of the transport organisation being cash-flush.

“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 (association incorporated under Section 21), was not selected as a shortlisted bidder and accordingly shall not progress to the second phase of evaluation for the proposed transaction,” Sono told Santaco.

Santaco president Phillip Tasibosch played his cards close to his chest over the weekend, saying they were still evaluating their options.

Aviation analyst Mojapile Mashego said many factors were at play in the evaluation, but that Mango without assets and profitable routes was a hardsell anyway.

Story continues below Advertisement

“With R820 million you can start your own airline. They want too much for Mango … They had three aircraft, now reduced to two, all on lease. Santaco could not come to a viable conclusion about Mango as something to try,” Mojapili said.

Tasibosch told Business Report over the weekend that it was too early to express their position.

“There are certain things people involved with the deal are busy looking at, we will state our position in due course,” he said.

Story continues below Advertisement

Pundits pointed out that SAA, through its major stakeholder, the Department of Public Enterprises (DPE) steered by Minister Pravin Gordhan, were reluctant to let foxes into the den, specifically a well-muscled entity which would pose serious competition for SAA.

“Santaco has got serious money. There is going to be war. If those guys (DPE and SAA) want Mango liquidated so they don’t have competition on their hands, their best option is to see it liquidated like SA Express. There’s a lot of politics involved, it is not business as usual … There is a lot going on behind the scenes,” a source said.

He said there was little transparency in the deal and that it was a surprise that Santaco, with more than 600 000 taxi drivers on South African routes daily, with more than 2 million paying passengers, could not meet muster on the BRP evaluation.

Story continues below Advertisement

“SAA does not want Mango to fly, there are preconceived ideas about what to do with Mango by the minister. SAA does not want Mango to fly because it might just be too much competition for SAA, that is what they are watching right now. Mango is a threat they don’t want to meet in the skies,” the source said.

He said that the BRPs were making a package off the process, having bagged more than R500m at this stage, and were more interested in a fair outcome.

The issue of the Takatso Consortium failing to raise the required R3bn to consolidate the deal with SAA, also came under scrutiny.

“SAA is a cash cow for those involved, nobody wants to see it resuscitated. They will keep asking the government for money to keep it afloat, that is how they eat,” the source said.

Sono would not be drawn to discuss any part of the business rescue process at this stage.

“I am not going to give a perspective on people’s bids, the bid process is continuing. We will hopefully conclude the process between March and April, with things being finalised by then I hope,” he said.

The SA Cabin Crew Association (SACCA) and the National Union of Metal Workers said they had been largely kept in the dark about the processes at Mango, but were concerned about the fate of its now 100 workers.

Commentators have said that Mango’s reputation had suffered irreparable damage in the low-cost carriers (LCC) market, and that without independent licences and their own aircraft, it was a hardy picking in the basket of options.

[email protected]

BUSINESS REPORT ONLINE

Share