Mango unions claim they are being 'blackmailed' to drop business rescue application

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  • Unions who are applying to court to have Mango airlines placed in business rescue claim they are being "blackmailed" to drop it.
  • They claim SAA has indicated that, should they drop the case, money will be transferred to Mango in order to pay employees' outstanding salaries.
  • The unions accuse SAA and government of attempting to take control of the rescue process.

The unions that have filed an urgent High Court application to have Mango placed in business rescue claim that its parent company South African Airways (SAA) is trying to get them to drop the case in return for getting money transferred to pay outstanding salaries.

"It seems we are being blackmailed," Zazi Nsibanyoni-Mugambi, president of the SA Cabin Crew Association (SACCA) told Fin24 on Thursday.

She said her response was echoed by the other two unions involved in the court application, namely the National Union of Metal Workers of South Africa (Numsa) and the Mango Pilots' Association (MPA).

"We made it perfectly clear that collectively we see a good process unfolding, but it seems SAA wants to exclude us in Mango's business rescue process and take it over themselves. We do not understand why we cannot do it collectively in order to create a restructuring plan and turn the airline around," said Nsibanyoni-Mugambi. 

"It seems there are hidden agendas that will come to the fore. We are still consulting with our lawyers. This is disgraceful behaviour."

Jordan Butler, chair of the MPA, says SAA has made it clear that, if the three unions continue with their urgent application to have Mango placed in business rescue, then bridging finance which has become available to pay outstanding Mango salaries will not be paid over. On the other hand, SAA indicated that, if the unions decide not to go ahead with their urgent application, SAA will pay over monies for Mango salaries.

It is Butler's understanding that SAA and government prefer to bring a business rescue application from their side, "because then they can guide the process via their selected business rescue practitioner - as was the case with SAA".

The joint unions also sent out an invite to all affected creditors of Mango to join them on their business rescue application.

"The unions are not requesting any moneys to be paid to join our application. We believe that with creditors and unions working together, we can ensure a fair and transparent business rescue process," said NsibanyoniMugambi. "Our offer of a joint business rescue, together with SAA and the DPE, still stands."

On Thursday, Mango referred Fin24 to SAA, which did not address the allegations, apart from indicating that it is engaging all key stakeholders and will provide an update as soon as possible.

The Department of Public Enterprises said it had no comment.

In their court documents the unions claim that they grew tired of promises by SAA, government and Mango's board. The unions say that while the situation at Mango is currently "extremely urgent and dire", the airline can easily be rescued using existing assets and re-allocating funds. They estimate the airline could be profitable again by 2023 or 2024.

Mango is about R2.5 billion in debt. This includes about R718 million which Mango owes its fellow SAA subsidiary SAA Technical, R156 million owed to Airports Company SA (ACSA), and R57 million owed to Air Traffic Navigation Services.

Government has earmarked about R819 million for Mango from a special allocation from Treasury which is meant implement SAA's own business rescue plan. SAA emerged from business rescue in April this year. But it seems the R819 million for Mango will only be transferred once the airline has been placed in business rescue.

In June an aircraft lessor company initiated liquidation application proceedings against Mango. The court date was, however, postponed to August following negotiations between Mango and the creditor.

If the liquidation application is not opposed, Mango will be placed in liquidation, and its assets, which are limited, will sold and the proceeds divided among creditors. By going into business rescue, the liquidation application will be suspended, which the unions believe offers Mango a better chance of surviving and saving jobs.

Mango employs about 750 people. Mango employees have continued working "out of sheer goodwill" and despite being owed the equivalent of about six months' worth of salaries.

Retrenchment processes have already started at SAA's other two subsidiaries SAA Technical and Air Chefs.

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