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SAA to tighten its grip on Mango

Procurement decisions to be referred to SAA committee.
Dudu Myeni, SAA Chairperson

Moneyweb has learnt that the South African Airways (SAA) board, under chairperson Dudu Myeni, has taken a decision that will see it tighten its grip on its low-cost subsidiary Mango and take charge of all large procurement decisions.

SAA failed to respond to questions Moneyweb posed to it on the matter and Mango responded: “at this time we would like to decline further comment”.

According to sources with knowledge of the matter, the SAA board in May decided to “discontinue the treatment of Mango as if it wasn’t part of the SAA group”.

This is a departure from previous practice that was based on a review by the Competition Commission (CompCom) prior to the inception of Mango, to guard against offending the Competition Act.

In a press release in 2012 that addressed allegations of uncompetitive conduct, then public enterprises minister Malusi Gigaba described Mango as “from day one, an entity operating independently from its Shareholder (South African Airways)”.

The SAA board allegedly resolved in May that all SAA members, including acting CEO Musa Zwane and interim CFO Phumeza Nhantsi, should be invited to attend the next Mango board meeting, scheduled for the end of this month.

It further resolved that all procurement transactions above the delegated authority of the Mango CEO (believed to be R25 million) should be referred to the investment committee at SAA for consideration and recommendation to the Mango board.

The SAA board further decided to have all policies, including the procurement policy, updated to reflect the new course of action.

Corporate governance expert of Ratings Afrika, Charl Kocks, says the question is why the SAA board has now decided to break with previous practice in this way. He says SAA directors attending Mango board meetings won’t have voting rights unless they become Mango directors as well. Their presence could however inhibit free debate and there is a risk of disclosure of sensitive information given that both airlines operate in markets that have some overlap, Kocks says.

Mango-SAA relationship

The SAA board decision comes as Mango founder CEO Nico Bezuidenhout leaves the low-cost airline after more than a decade, to join regional airline fastjet.

Bezuidenhout was earlier seconded to SAA as acting CEO and under his leadership substantial progress was made with the airline’s Long-term Turnaround Strategy. His relationship with Myeni apparently soured as she interfered with the plan and he was sent back to Mango almost a year ago.

Mango has been seen as successful – in sharp contrast with SAA that has been unable to publish its financial statements for the last two financial years, due to going concern issues.

Mango has been profitable in all but two years since it commenced operations in 2006.

Moneyweb has learnt that assets representing between R450 million and R500 million of its retained earnings are being held in the central SAA National Treasury-controlled account, while an additional R300 million is held in a separate Mango bank account to which SAA does not currently have access.

It is unclear whether the SAA board will allow Mango to retain this R300 million in its own account and SAA did not respond to specific questions in this regard.

The CompCom recently embarked on an investigation of the relationship between SAA and Mango and its impact on the market. This followed after SAA stated in June that “SAA materially contributed to the much celebrated financial performance of Mango Airlines and will continue to support the airline should the need so arise”. This, it said, was done through subsidised aircraft sub-leases to Mango.

SAA later back-tracked, but the Democratic Alliance nevertheless laid a complaint at the CompCom, that prompted the investigation.

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Should they not tighten the grip on themselves first?
Maybe they want to see how to run an airline?

yes, they already destroyed SAA, now moving on to the next.

Ah shame. . . . the kiss of death for Mango ! ! !

Corporate Governance is an anathema to this lot. Corruption and ineptitude rule – as always. If SAA were a private sector company it simply could not exist and management would be behind bars.

Makes sense as there is a corruption scandal wrt to SAA procurement..with a Zuma involved

Just spent best part of an hour visiting the website you refer to. WOW, wow, and wow again.

SAA must pop soon, also just read this apart from the syphon the thuggery reads like “The Godfather”

Yep. “Babyface” Dudu and Big Daddy “Machine Gun” Jake strike again! Don “Bugsy” Sizwe gets to be the next Capo. Kapisch?

Incredible. Or maybe not so. Certainly a shocking case of capture.
This story must be circulated.

MMM read the Alex Hogg interview with paul Sullivan and it makes sense as there is a siphoning scam on large procurement contracts

End of comments.





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