Mango Airlines’ business rescue plan accepted by 84% of creditors on Thursday makes fascinating read. It owes a lot of money to other state companies (SOEs) and state bodies.
Much of this is because the government never resolved the fact that it operated three independent state airlines: South African Airways (SAA), Mango, and SA Express. This has created a situation where Mango now owes more than R1 billion to SAA and SAA Technical, which have just come out of the business bailout.
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In fact, much of the government funds allocated to the airline under the parent SAA business rescue process will now be used to implement Mango’s business rescue plan (in other words, not for working capital or to restart operations) .
SAA will make a capital injection of R719 million and will subsequently cede its equity stake to the government, as SAA’s board “endorsed management’s assessment that Mango Airlines does not fit into SAA’s future business strategy.” The Takatso Consortium has confirmed that it has no interest in Mango either.
In total, Mango owes R2.8 billion to creditors.
Of this, R2.5 billion is owed to so-called “concurrent” creditors (who have no collateral on amounts owed).
The airline owes the South African Revenue Service (Sars) a total of R97.4 million, mainly in unpaid taxes as earned (R34.6 million), customs (R47.6 million) and VAT (R11.4 million). ). The plan says that “Sars’s claim will be compromised through liquidation / expungement.”
Mango owes another 159 million rand to its employees in salaries and leave. The corporate rescue plan says that the airline has 708 employees and that because the company “will not resume operations”, it is necessary to “rationalize its workforce.” It has started a voluntary severance program. The business plan warns that if acceptance of this is low, the airline “may have to cut part, if not all, of its workforce.”
Since they were placed on corporate bailout, the employees have received their full wages for July, August and September. In October, employees received 50% of their salaries and “the balance (R12.8 million) will be paid shortly after receiving the additional financing expected from the shareholder.” Employees are intended to receive their unpaid compensation and severance packages in full.
A remarkable 52% of the total amount owed to concurrent creditors (R2.6 billion) is due to state companies or state bodies. The following are significant or significant concurrent creditors.
|SAA Technician||802.2 million rand|
|South African Airways||315 million rand|
|South Africa Airports Company||170.4 million rand|
|Air navigation services||63 million rand|
|South African Civil Aviation Authority||16.9 million rand|
|Auditor General of South Africa||1.1 million rand|
|South African Meteorological Service||R940 000|
|Macquarie Aircraft Leasing Services (Ireland)||292.3 million rand|
|Start Lease in Ireland||140.8 million rand|
|GE Capital Aviation (Celestial Aviation Trading 41 Ltd)||134 million rand|
|Aergen Aircraft Five Limited||84.6 million rand|
|Lufthansa Technik AG||
|Aviation coordination services||23.3 million rand|
|Bidair services||5 million rand|
|Comair Limited||1.4 million rand|
|Motor Leasing Finance Corporation||1.5 million rand|
|1.9 million rand|
|Israel aerospace industries||3.6 million rand|
|Lanseria International Airport||14.3 million rand|
|Menzies Aviation||16.4 million rand|
|Travelport International||1.5 million rand|
* Amount per creditor claim (if not available, balance according to company records)
Landlords are owed a total of R652 million, or 25% of all competing claims.
Mango owes an additional R299 million, or 12% of the total, to Lufthansa Technik, which would have provided aircraft maintenance services to the airline as SAA Technical became increasingly unable to do so.
Service providers such as Bidair (5 million rand) and Menzies Aviation (16.4 million rand) are owed much smaller amounts, as is Lanseria International Airport (14 million rand). the grounded The “suspended” airline even owes R1.87 million to Google.
Concurring creditors can expect a payment of 4.43 cents in the rand under the current plan.
This means that, for example, SAA and SAA Technical will receive a payment of R49 million of the R1.1 billion owed. An additional R9.7 million – and counting – in post-commencement claims will be settled in full (this excludes salaries to be paid separately).
It is understood that the process of finding a strategic equity partner will begin in the “next few days.”
Mango also has a non-flown ticket liability of R183 million, which will be settled by issuing coupons to passengers to use once the airline begins operating.
Future travelers probably won’t need to hold their breath.