Mango to keep flying for now, as govt 'assesses' future of SAA subsidiaries

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The DPE says SAA's subsidiaries will need to be restructured and in some instances, the case for continued existence must be assessed.
The DPE says SAA's subsidiaries will need to be restructured and in some instances, the case for continued existence must be assessed.
  • Low-cost state-owned airline Mango will continue to operate, it announced late on Friday afternoon.
  • This followed shortly after the rescue practitioners of SAA announced they are exiting the process.
  • The Department of Public Enterprises is waiting for Parliamentary approval so that R2.7 billion can be allocated to SAA's subsidiaries, which include Mango.

Despite a lot of speculation and uncertainty during this past week, Mango Airlines confirmed late on Friday afternoon that for now, it will continue to operate as normal on Saturday 1 May 2021 and beyond - except for its Zanzibar route. 

An update on the Zanzibar route is expected sometime next week.

This announcement followed shortly after the business rescue practitioners of South African Airways (SAA) announced on Friday that they filed a notice of substantial implementation with the Companies and Intellectual Property Commission (CIPC). This brings to an end the business rescue process of the state-owned flag carrier, which began on 5 December 2019.

Mango is a subsidiary of SAA and is not in business rescue.

The Department of Public Enterprises (DPE), SAA's shareholder said in a statement on Friday that the interim board of SAA is now mandated to oversee the strategic, financial, and operational management of the subsidiaries of SAA, South African Airways Technical (SAAT), Airchefs and Mango and ensure their commercial sustainability. 

Restructured and reassessed

"These subsidiaries will need to be restructured, and in some instances, the case for continued existence must be assessed," the DPE said.

SAAT has already started a Section 189 retrenchment process earlier this week in terms of the Labour Relations Act.

Late on Wednesday Airports Company SA lifted a suspension it imposed on Mango flights that day, where the low-cost airline was forbidden to use its airports due to outstanding debt.

Fin24 reported a week ago that Mango looked likely to stop operating for a few months as from 1 May, according to internal communication seen at the time. The internal Mango communication stated that the executives and board of Mango, as well as the interim board of its parent company 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.

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

Another document seen by Fin24 last week, from Mango acting CEO William Ndlovu and addressed to employees, states that at the beginning of April 2021, the airline was informed that Mango would only receive 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," says Ndlovu. "The lessors then put an ultimatum to Mango that should they not receive their money by 30 April 2021, then all their aircraft must be grounded until such time that Mango receives the funds and is able to pay."

It is as yet unclear whether SAA now having exited the rescue process and the interim board taking over, it will be able to have some funding flow to the subsidiaries like Mango until the Parliamentary approval of the R2.7 billion is obtained.

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