From that 66% increase it settled at 39p by market close on Friday.
By the time of Moneyweb’s interview on Friday afternoon, the increase was 47%. Bezuidenhout called the reaction “mind-blowing”, pointing out that it represents a R120 million-increase in the market value of the company.
That kind of confidence does not come easily and it is testimony not only to the success of low-cost domestic airline Mango -which he headed from its inception in 2006 – but also the relationships he has built in the international aviation industry.
Mango, a subsidiary of State-owned South African Airways (SAA), is the fourth fastest-growing airline on the continent, after three major Middle Eastern airlines and has a 25% share in the domestic market. It was profitable in all but two years since 2006, Bezuidenhout says.
Nevertheless SAA issued a statement on Saturday afternoon insinuating that Bezuidenhout prejudiced SAA in favour of Mango with regard to route allocation, while rejecting “that there is nexus between Mr Bezuidenhout’s resignation and internal investigations across the Group”. Read the full SAA statement here.
SAA also states that Mango’s “much celebrated financial performance” was in actual fact the result of SAA’s assistance (an incredible about-turn from previous positions).
SAA further not-so-subtly reminds its audience of the controversy with Bezuidenhout’s qualifications. “Under public and media scrutiny about his qualifications, Mr Bezuidenhout was defended by SAA after he provided an explanation as to why his academic qualifications were overstated in the annual report on two successive financial years.”
Loves Mango but . . .
Bezuidenhout clearly loves Mango and enjoyed his time leading the perky brand. “I wish I could take my company with me,” he says.
But the relationship with the controversial parent company is clearly not what it should be.
Bezuidenhout denies running away from an internal investigation. He has been in talks with fastjet for at least five months and visited London in February where he met institutional shareholders representing 45% of the shareholding.
“I wanted to make sure they are committed to the company,” he says.
fastjet is a low-cost regional airline operating in Africa. Currently 80% of its operations are in Tanzania and it also has a presence in Zimbabwe.
Bezuidenhout sees a lot of potential in the African market. It is hugely under-served, representing only 3% of global air services and ticket prices are high. Next year the open skies policy should be implemented, in terms of inter-governmental agreements concluded last year, and this will change things dramatically.
fastjet is not currently profitable and its last reported load factor was only 66%. Bezuidenhout says the company should be prepared for market changes.
It has to move its head office from Gatwick outside London to Africa, lower its cost base, improve its distribution and communicate with Africans in a way that really talks to them.
For this purpose he will take lessons from Mango, such as partnering with known and trusted brands like Shoprite and Vodacom, and partnering with international airlines to establish connections for travellers from Europe.
He will also assess the suitability of the current fleet of A319 planes. “They have 145 seats, but 100 to 110 seats may be more suitable on most routes.”
fastjet will have to develop a presence in South Africa, he says.
It will most probably shrink as corrective steps take effect but could turn profitable on a month-to-month basis by the end of next year, Bezuidenhout says.
“I will approach it much as I approached my two terms at SAA,” he says. First, consolidate before you grow.
He was twice seconded to act as SAA CEO, the last term ending by mid-2015 after he successfully implemented a 90-day turnaround strategy that saved the airline R1.2 billion.
But then he was sent back to Mango and things went haywire at SAA. A R2 billion equity deal with Emirates went south and the SAA board tried to pull out of the deal Bezuidenhout helped negotiate to restructure SAA’s costly aircraft procurement. It was eventually concluded in December after intervention by National Treasury.
“If only we did two things differently. The Emirates deal did not need board approval. We should have just done it. And the Airbus deal was approved as early as April. We should only have added a provision authorising the CFO to execute it ….”
Is there hope?
Does he have hope for SAA? “I’m concerned about the loss of skills. Currently there is an acting CEO at SAA Technical, [at] Air Chefs and now there will be one at Mango. At SAA itself, there is an acting CEO, CFO, head of commercial, head of HR and chief procurement officer . . .
“How does one manage a R30 billion-a-year company with that absence of skills and leadership?”
A “soap opera”, he called it on this Talk Radio 702 interview.
He would have liked to challenge the running of SAA, but Bezuidenhout says he would only have agreed subject to the political will being there to do the right things and with a strong board in place.
He doesn’t want to say much more about the current SAA board and especially its controversial chairperson Dudu Myeni.
He made personal sacrifices in an effort to get SAA back on track. His daughter’s birth was scheduled around his SAA meeting schedule. And last year he had to preside over the retrenchment of about a 1 000 SAA employees.
These things are painful, but it makes sense if it saves the company. “But then you undo all of it five-fold just by negating on the Airbus deal. And 1 000 families still don’t have food on their tables.”
That makes him sad.
It is not easy to leave Mango, but it is strong and can stand on its own legs. If it is allowed its own space, he says.
Bezuidenhout looks forward to the strict governance requirements the listed environment fastjet operates in.