Friday, January 21

SAA board signs Mango’s death warrant: 709 jobs likely to be lost


This article was first published on Citizen.co.za here and republished with permission.

Fragile budget airline Mango will not resume operations in December this year as outlined in its corporate bailout plan, if its shareholder SAA and ultimate shareholder, the Department of Public Companies, have their way.

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The Citizen has seen an exchange of correspondence between SAA acting president Profession John Lamola and business bailout practitioner Sipho Sono, in which Mango is explicitly instructed not to pursue the intent of the plan, published in late October.

This could soon mean the end of Mango and the 709 jobs.

Lamola’s letter, dated October 30, 2021, refers to the business rescue plan released the same day saying that: “… our concern (from the SAA board) that the business rescue plan states that Mango will resume flight operations in December 2021. ”

The SAA chairman argues that “SAA, as Mango’s sole shareholder, was not in a position to provide or motivate the SAA shareholder for any capital injection necessary to return Mango to business operations.”

Read the correspondence here and here.

Lamola adds that there are no funds available for working capital to allow Mango to resume operations.

Earlier this year, R819 million was allocated to the troubled airline through a special allocation to aid its survival.

Lamola, also an associate professor of sociology at Unisa, said in the letter that Mango’s notion of restarting, in the opinion of the SAA board, is not feasible and flights should not resume until a strategic capital partner is found. Mango’s business rescue plan provided an option for the investor or, alternatively, the liquidation of the company.

Lamola notes the SAA Board’s expectation that the business rescue plan will be restructured to accommodate its order not to restart and said that the funds granted to Mango should not be allocated to working capital.

Sono responded on Thursday, November 4, saying that his understanding has always been that the R 819 million ransom would include a resuscitation of Mango.

To avoid confusion, he pointed out to the SAA Board that Mango’s business, like any airline, is to transport passengers and generate income from such activities. Sono believes that Mango has a good chance of covering its overhead costs.

Not anymore.

If Mango is suspended for much longer, he risks losing his Air Operator Certificate – key route rights he has acquired, such as Johannesburg to Zanzibar and reportedly Johannesburg to Mauritius, among others.

It would also have to get rid of most, if not all of its staff, defeating the purpose of the corporate bailout.

There is also the question of the R183 million in non-flown tickets that would be turned into coupons for customers who were already furious.

Additionally, Sono notes that attracting investors would become more challenging and that an operating airline is worth more than a dismantled entity. After all, the longer the wait, the more expensive the reboot will be.

Sono notes, in a visibly irritated tone, that there has been insufficient justification provided by SAA or the ultimate shareholder, Public Enterprises, why a restart would be riskier than the current substantiated status quo.

Mango will meet with creditors on Friday, November 5, and Sono noted that the correspondence stating SAA’s position will be made available to all interested parties.

In addition, he requested an urgent response from SAA.

This article was first published on Citizen.co.za here and republished with permission.


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