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Tag: Mango Airline

Should government save Mango or SAA

After all the time taken with the business rescue process of South African Airways (SAA), the end result could be that neither the state-owned flag carrier nor its subsidiaries – including low-cost airline Mango – survives, an economist warned.

The reason for this according to Peter Attard Montalto, head of Capital Markets Research at Intelidex is not focussing on the survival of “sustainable parts”

In his view, Mango should perhaps have been the center of any sustainable future for a state-owned airline, and not its parent company, SAA.

Unlike SAA, Mango and the other subsidiaries, SAA Technical (SAAT) and AirChefs, are not in business rescue.  On Wednesday, Mango was forced by Airports Company SA (ACSA) to suspend all flights due to monies owed for landing fees, parking fees and passenger service charges.  Following negotiations, ACSA lifted the suspension after Mango made certain payments.

SAAT, meanwhile, has entered a retrenchment process.  “Mango could have been rebranded with more flags.  Mango was a better base to build a recovery than the holding company and SAA.  Some expansion to regional and even international routes was deemed profitable.  This could have happened under appropriate management and with a strategic equity partner (SEP),” Montalto commented on Wednesday.

SAA’s shareholder, the Department of Public Enterprises (DPE), has been trying to get R2.7 billion of the R10.5 billion allocated to SAA in the medium-term budget in October last year to go to the airline’s subsidiaries – Mango, SAA Technical and AirChiefs.

Treasury requires Parliament to make a special allocation in this regard before the R2.7 billion can flow to subsidiaries.

“The Mango situation is a great shame because it is, underneath everything, a well-run and sustainable airline.  However, it has gotten caught out in the games going on over SAA in government and, in particular, the appropriations bill which has been inserted – perhaps unnecessarily – into this whole process to get the equity to recapitalise Mango and the other subsidiaries,” says Montalto.

Mango indicated that it is, as yet, unclear whether the airline would still be mothballed from 1 May, as reported last week.  The internal Mango communication stated that the executives and board of Mango, as well as the interim board of SAA, decided on this step after having had to fend off creditors for the past six months and not being able to stall them any longer.

A reliable source in the aviation industry, comments that “supposedly, all airlines operate on an equal footing”.  Yet, he cannot help but wonder how much credit is afforded to state-owned airlines Mango and SAA by other SOEs before they take the type of actions that ACSA finally took on Wednesday.  “Private entities don’t ever seem to get the same lifeline” he says.

Another industry insider agrees and claims private airlines would be grounded immediately, without any “conversation”, if money was owed.  He says apparently Mango’s aircraft lessors demanded re-delivery of eight aircraft as they have not been paid.

ACSA responded that the approach it takes with its business relationship with Mango is consistent with its approach to all other airlines.  It is based on the terms and conditions entered into contractually, the details of which remain confidential.  ACSA also indicated that, should Mango fall behind again, its flights would once again be suspended.

Mashudu Raphetha, general secretary of the Dynamic People’s Union of South Africa urged Mango and the DPE to find an urgent solution.  “The R2.7 billion is there.  It must just be distributed.  We cannot afford for mango te be grounded for a solution which is there.  Our members are panicking at the threat of Mango going into business rescue and salaries being suspended for two months,”  he said.

The union believes there is “a political squabble” aimed at destabilising workers at Mango.  “Prioritise Mango, SAA Technical and AirChefs for the group to resuscitate itself,” he says.

 

Mango Airlines ‘to stop flights in May’

Mango Airlines looks set to have all 14 of its aircraft grounded from May – for at least a couple of months – after a cash liquidity issue put the low-budget domestic carrier on the ropes. A leaked memo to staff confirms that the business ‘will not be able to operate flights’ in just three weeks’ time.

MAN-GOING NOWHERE: AIRLINE SET TO SUSPEND OPERATIONS

The Acting Chief Executive Officer William Ndlovu sent the memo out on Thursday. He explained that Mango Airlines is all but certain to go into business rescue – following the same path traversed by the national carrier, SAA. From 15 May, and throughout most of the winter it seems, there’ll be no orange marvels in the skies of South Africa:

“This means that Mango will not be able to operate from May 15, 2021, due to no aircraft being available for operations. It has been proposed that we must be put into business rescue until July 2021. Our flights will be grounded until such a time where we receive funding or complete the business rescue process.” | William Ndlovu

WHY MANGO AIRLINES ARE PREPARING TO GROUND FLIGHTS NEXT MONTH

After several delays in creditor payments, officials confirmed that the airline had reached ‘a difficult situation’. Although this does not spell the end for Mango, and a period of ‘mothballing’ is likely to help get them flying again, those who rely on cheap and cheerful air travel across Mzansi will feel like they’ve lost a limb when this service goes offline:

“At the beginning of April 2021, we were informed that Mango will only receive owed funds in June 2021. This put Mango in a difficult situation – as it relates to further extension from the creditors who could not wait any longer to be paid.”

“The lessors then put an ultimatum to Mango that should they not receive their money by April 30, 2021, then all their aircraft must be grounded until such time that Mango receives the funds and is able to pay. We have been told by the shareholders that there will be no money received by Mango until June 2021.”

William Ndlovu

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