In leaked correspondence it appears SAA and the Department of Public Enterprises have no plans of allowing Mango back in the sky.
Frail budget airline Mango will not resume operations in December this year as outlined in its business rescue plan, if its shareholder SAA and ultimate shareholder the Department of Public Enterprises, have their way.
The Citizen has seen an exchange of correspondence between SAA interim chairperson Profession John Lamola and business rescue practitioner Sipho Sono, wherein Mango is explicitly instructed not to pursue the intent of the plan, published at the end of October.
This could mean the end of Mango and all 709 jobs soon.
Lamola’s letter, dated October 30, 2021, refers to the business rescue plan published on the same day saying that: “… our (the SAA board’s) concern that the business rescue plan provides that Mango will resume flight operations in December 2021.”
The SAA chair argues that “SAA as the sole shareholder of Mango was not in a position to provide nor to motivate to SAA’s shareholder for any capital injection required to return Mango to commercial operations.”
Read the correspondence here and here.
Lamola adds that there is no funding available for working capital to allow Mango to resume operations.
Earlier this year, R819 million was allocated to the ailing airline through a Special Appropriation to assist in its survival.
Lamola, also an associate professor in sociology at Unisa, said in the letter that the notion of Mango restarting, in the SAA board’s considered view, is not feasible and flights should not resume until a strategic equity partner is found. The Mango business rescue plan provided for an investor option or, alternatively for the company to be wound down.
Lamola notes the expectation of the SAA Board that the business rescue plan be restructured to accommodate its no-restart command and said that funding given to Mango should not be allocated to working capital.
Sono responded on Thursday 4 November saying that his understanding has always been that the R 819 million bailout would include a Mango resuscitation.
To avoid confusion, he noted to the SAA Board that Mango’s business, like any airline, is to fly passengers and generate revenue from such activities. Sono is of the opinion that Mango has a good chance to cover its overheads.
Not anymore.
If Mango is mothballed for much longer, it risks losing its Air Operator’s Certificate, key route rights that it has acquired like Johannesburg to Zanzibar and, reportedly, Johannesburg to Mauritius among others.
It would also have to shed most, if not all of its staff, defeating the purpose of business rescue.
There is also the question of the R183 million in un-flown tickets that were to be converted into vouchers for already irate customers.
Furthermore, Sono points out that attracting investors would become more challenging, and that an operating airline is worth more than a mothballed entity. After all, the longer the wait, the more costly the restart.
Sono notes, visibly irritated in tone, that there has been no sufficient rationale provided by SAA nor the ultimate shareholder, Public Enterprises, why a restart would be more risky than the current, grounded status quo.
Mango will be meeting with creditors on Friday 5 November and Sono noted that the correspondence noting SAA’s position will be made available to all stakeholders.
In addition, he requested an urgent response from SAA.
