Mango expects to announce profit; competition remains tough in an overtraded market

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The FINANCIAL — Multi-award winning low-cost airline Mango expects to post profit for its recently completed financial year 2014/15. The airline’s bottom line result will be published before the end of October this year.

A profitable outcome would make it the carrier’s 7th profitable full fiscal (of 8 completed) where the carrier added two additional aircraft, increased frequencies on some trunk routes and further enhanced its wide distribution reach with the addition of its mobile apps across all major platforms among others. In less than a decade Mango has more than doubled its fleet, increased its network destinations by 150% and flown in excess of 14.2 million Guests over an average of 1400 flights a month, according to Mango.

“Despite ongoing economic challenges and new market entrants toward the end of the 2014 calendar year and in early 2015, Mango has delivered a solid performance. Revenue has grown and costs have remained well controlled,” says spokesperson Hein Kaiser. “We do not expect to smash any records, but in an industry where volumes grew by as little as 2% along with severe pressure on margins, Mango is expected to emerge relatively unscathed.” He says that effective revenue management along with the airline’s low cost base and high productivity continues to provide a solid base.

Market conditions remain tough. “Capacity on trunk routes like Johannesburg-Cape Town continue to be somewhat crowded with airlines competing for a limited pool of travellers.” Economic growth has now been pegged at less than 2% with two successive quarters of decline expected by some economists. While currency depreciation has negated much of the gains of a lower fuel price. Market conditions may soon mirror the milieu of a few years ago when two low cost airlines exited the market. 

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Mango continues to be highly cash positive and will counter circumstance with continued innovation, broadening its already extensive distribution network, prudent fiscal management and marketing among others. “Our asset utilization already counts amongst the top airlines in the world. Sound operational efficiencies along with high visibility and innovation will provide the bedrock of success during adverse conditions.” In addition, says Kaiser, delivery of the airline’s value-driven product and leading on-time arrival performance is expected to attract growing numbers of business travellers. Presently Mango’s market share on routes it operates is at 26%.

Mango recently announced a new route between Lanseria and Durban along with the addition of an extra frequency from Cape Town to Lanseria. “Demand and prudent network development governs our approach to growth,” says Kaiser. “Expected development on the West-Rand holds current and future dividends as Lanseria serves not only as an alternate to OR Tambo International Airport but as a node that drives growth.” The airline’s first flight between Lanseria and Durban departs on 15 October this year with encouraging forward sales in both directions. “The new early morning flight from Cape Town to Lanseria has also attracted substantial interest,” adds Kaiser.

 

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