Mango legally bound to release results
2012-11-07 09:26
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2012-11-06 09:28
Embattled low-cost airline 1time is pinning its hopes for a cash injection on British investors. WATCH
Johannesburg - In light of the recent demise of 1time airlines, Comair Limited says Mango, as a separate legal entity from SAA, and a state owned enterprise, is legally required to publish its financial statements – which has not been done since Mango’s inception six years ago.
However, Mango’s CEO Nico Bezuidenhout stated on Tuesday that his state-subsidised airline will only reveal its financials, if kulula does so first.
CEO of Comair, Erik Venter responded that Comair, as a listed company on the JSE, releases detailed financial results every six months in accordance with the Companies Act, the rules of the JSE and based on International Financial Reporting Standards. “Comair has an obligation to reveal its results as a listed company. kulula.com is merely a brand of Comair Limited – it is not a separate company from Comair. Although Mango is a subsidiary of SAA, it is a separate company and needs to report as such.”
Mango is legally obliged, as a National Public Entity listed under Schedule 2 of the Public Finance Management Act (PMFA), to publish its financials and submit these to government and the general public.
“This points to a bigger question - who is taking responsibility to ensure that SAA, SAX and Mango comply with their legal requirements in terms of the Public Finance Management Act?” says Venter.
Based on the previously released financial statements of SAA and recent parliamentary comments, Mango made a loss of R500 million since its launch in 2006, based on undercutting the viability of the private low-cost carriers.
Venter said this brought into question government’s breach of its own aviation transport policy when the industry was deregulated to allow competition with SAA in the domestic market.
In 1992, on deregulation of the domestic airline industry, government developed this policy which was intended to govern the behaviour and funding of SAA in a competitive domestic environment.
“This included the provisions that SAA was not allowed to cross-subsidise domestic with international operations, and that it could not receive government funding or guarantees as long as private competitors were required to rely on commercial funding, all of which is now taking place.” said Venter.
“While we will obviously put up resistance to the unfair competition from SAA and Mango this is not new to us. We have been dealing with it for most of our history,” he said.
"It dates back to when Sun Air went down and SAA bought out its shareholders. When 1time launched it took a different approach and launched Mango... SAA is effectively taking out private airlines."
Venter stated that Comair has in fact lodged its third case against the national carrier for anti-competitive incentives to travel agents to off sell competitors. SAA has twice been fined for anti-competitive behaviour.
"The penalties are just so small that it's not a deterrent." Venter said.
After SAA received its R5bn bailout Venter again raised this issue that SAA should not be allowed to use it for SAA’s domestic operations as this would mean a change in policy, which would require participation from all stakeholders.
Venter believes the biggest obstacle in creating a healthy competitive industry is the Department of Transport’s policies that seem to work against promoting entry into the private sector.
Venter questions what government' strategy is in terms of promoting the private sector and says the new CEO of SAA has their work cut out for them a since the issues facing the airline are so massive and could be "way beyond governments appetite".
"Government really needs to start putting their money where their mouth is. And it's not restricted to the aviation industry as the same thing is happening with Telkom."
