Unions apply to have Mango placed under business rescue
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WORKERS' unions at Mango Airline have approached the South Gauteng High Court to file an urgent application to place the airline under business rescue to save it from liquidation.
It was not clear at this point, however, what would be the implications of this decision for South African Airline's (SAA's) 51 percent strategic equity partner, Takatso Consortium.
The application was filed by the SA Cabin Crew Association (Sacca), the Mango Pilots Association (MPA) and the National Union of Metalworkers SA (Numsa) yesterday.
The unions said they had been forced to take this extraordinary measure as a result of the desperate workers' situation.
SAA yesterday also said it intended to place Mango under business rescue, with interim chief executive Thomas Kgokolo saying the board and shareholders had agreed to this.
“We are currently in consultation with our key stakeholders in terms of how we can manage that particular process,” Kgokolo said.
Mango acting chief executive William Ndlovu said their operations would continue according to the airline's operating schedule as published.
“The details of the decision to place Mango under business rescue are still being finalised by all stakeholders. The details of the process will be made available as soon as possible,” he said.
The State-owned low-cost carrier has not made a profit for years, but is believed to have liabilities that exceed R2.5 billion.
It has also been challenging tracking Mango's financial health since its parent company, SAA has not published audited results.
In April, Mango warned the market that it would temporarily suspend its operations for about two months from May 1 due to a severe cash crunch, before the government intervened.
Workers have not been paid salaries for more than two months in spite of the government's promises to recapitalise it once the Appropriations Bill for R819 million was passed.
Speaking on behalf of the unions, Numsa spokesperson Phakamile Hlubi-Majola said their aim was to save the company, their members' livelihoods and to salvage what can be from this situation.
Hlubi-Majola said one of Mango's creditors, Aergen Four Aircraft and Aergen Five Aircraft, had filed a liquidation application.
She said they also wanted the court to appoint Ralph Lutchman from Concord Administrators (Pty) Ltd, as the business rescue practitioner.
“We have served papers on all stakeholders over the weekend and an urgent application at the South Gauteng High Court will be filed today (Monday) to place Mango under business rescue,” she said.
Independent aviation economist Joachim Vermooten said the government probably had agreed on a business rescue process because the liquidation application was due in August.
Vermooten said Mango was a small airline with only four aircraft, which was later increased to 14 aircraft when the aviation market did not grow.
He said SAA's decision to retain Mango and not sell it had not been prudent, unlike US airlines which close down their low-cost carriers after organic growth.
“Mango's ability was increased and there was really not a market for such an increase, and as such Mango has incurred huge losses for a number of years due to such an expansion,” he said.
“The airline's expenditure could not be covered by revenue anymore, and liquid cash simply dried up to the point they could not continue paying salaries.
“I don't know if business rescue practitioners will restructure it to respond to today's demands.”