Mango hits the fan as almost 80% employees indicate they want out

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Mango went into voluntary business rescue at the end of July this year and has not flown since.
Mango went into voluntary business rescue at the end of July this year and has not flown since.
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  • According to a new report issued by Mango's business rescue practitioner Sipho Sono, the vast majority of employees have applied for voluntary severance packages.
  • The report also states that creditors will be voting on an amended rescue plan on 2 December.
  • Mango's shareholder, SAA, has stipulated that funding it provides not be used for Mango to resume operations, which makes it vital to find an investor as soon as possible.


A total of 553 of Mango's 708 employees, or 78%, have applied for voluntary severance packages (VSPs) offered as part of the low-cost airline's business rescue process.

This amounts to 86% of Mango's monthly salary bill of about R27 million. In addition, the contracts of employees who were hired on a fixed term have been terminated, resulting in a further reduction of the salary bill by 3%, according to the latest status report to affected persons published by the rescue practitioner Sipho Sono.

Mango's creditors will get to vote on an amended proposed business rescue plan on Thursday, 2 December.

Mango went into voluntary business rescue at the end of July this year and has not flown since. It owes R2.85 billion to creditors, and also has about R183 million of unflown ticket liabilities. The only material asset on Mango's balance sheet is a spare engine that was acquired from SAA and which has a current book value of R97 million.

Mango's shareholder, South African Airways (SAA), has stipulated that funding it provides not be used for Mango to resume operations. Because Mango is currently not in a position to resume operations without such funding, Sono says he has had to offer VSPs to all employees except a few critical positions required to keep the airline "on care and maintenance". 

The latest report

The latest report, seen by Fin24, states that a meeting to consider Sono's original proposed rescue plan was held on 15 November 2021. During this meeting, SAA tabled a proposal for an adjournment so to amend the proposed plan to reflect SAA's wishes. The amendment mainly related to SAA not wanting funding it provided to Mango to be used to resume operations. SAA wants Mango to only resume operations once a private investor has been secured "to step into SAA's shoes" as shareholder, according to Sono's report.

Earlier this year Mango was given R819 million from a special allocation approved by Parliament from R10.5 billion given by Treasury for SAA's own business rescue process. Mango has since received R100 million of the R819 million which it used for payment of salaries for July 2021 to September 2021 and 50% of salaries for October 2021. 

According to the latest report, a further amount of R320 million was received on 26 November 2021, to fund the VSPs "and other restructuring costs". The balance of R399 million is expected to be paid soon after the adoption of the amended proposed rescue plan.

Sono's original proposed rescue plan provided for Mango to enter into short-term arrangements with one of its aircraft lessors to provide for a reduced fleet of between three and four aircraft and for the airline to resume flying in December 2021. The original proposed plan wanted to use some of the R719 million funding from SAA to have Mango restart operations on certain domestic routes and at a later stage expand again to some regional routes.

It also proposed that staff numbers be reduced to align with the reduced fleet and to, at the same time, look for a strategic equity partner for Mango to acquire the shares currently held by SAA. The investor would also have to supply funding to enable Mango to procure a new fleet of about eight aircraft.

'Reasonable prospect' of rescue

Sono remains of the opinion that there is a reasonable prospect of Mango being rescued or that the outcome of his amended proposed rescue plan will at least result in a better outcome for creditors and the shareholder than a liquidation of the airline.

Some aviation insiders claim that Global Airways, a partner in the Takatso Consortium chosen by the Department of Public Enterprises as SAA's strategic equity partner, is waiting for Mango to be "out of the way" before finalising the SAA deal and thus paving the way for its own low-cost airline, LIFT, to step in. Global has denied this being the case.

Fin24 has also heard from reliable sources that Mango has already received some informal expressions of interest from potential investors. Sono, however, told Fin24 when asked about these informal proposals, that he has not yet called for formal expressions of interest and, therefore, there is "no basis to even entertain any rumours about the process or interested parties".

"Further, even once the process commences formally, no announcements will be made until the evaluation process is complete," explained Sono.

According to the amended rescue plan for Mango, the brand, its domestic and regional route rights, distribution channels and operating licence constitute "a considerable value" for which an investor will pay fair value. The plan does not set out what this amount should be, but some industry sources claim they do not think any investor would be willing to offer much for the airline since funding would rather be needed to get Mango flying again in a sustainable way.

Being 100% owned by state-owned SAA, Mango is governed by the Public Finance Management Act (PFMA). Minister of Public Enterprises Pravin Gordhan will also have oversight in any transaction with an investor.

If an investor is not secured swiftly and Mango is not able to continue trading for whatever reason, Sono would have to start with a structured winding down of the company.

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