Mango could be temporarily mothballed due to lack of funds
- Low-cost airline Mango is set to stop operating for a few months, according to internal communication seen by Fin24.
- According to the document, the DPE has been asked to consider putting Mango in business rescue, just like SAA.
- The DPE told Fin24 on Thursday evening that it is in discussions with the boards of Mango and SAA about the repositioning of the subsidiaries in the light of the delayed funding.
Low-cost airline Mango is set to stop operating for a few months, according to internal communication seen by Fin24.
The document states that the executives and board of Mango, as well as the interim board of its parent company South African Airways (SAA), decided on this step after having had to fend off creditors for the past six months and not being able to stall them any longer.
SAA's shareholder, the Department of Public Enterprises (DPE), has been trying to get R2.7 billion of the R10.5 billion allocated in the mini-budget in October last year to go to SAA's subsidiaries Mango, SAA Technical and AirChefs. Treasury requires Parliament to make a special allocation in this regard before the R2.7 billion can flow to subsidiaries.
According to the document, the DPE has been asked to consider putting Mango in business rescue, just like SAA.
It appears that salaries of Mango employees will still be paid this month. It is unclear what would happen next month.
A reliable source told Fin24 that the temporary suspension of operations will likely start from 1 May.
In another document seen by Fin24, from Mango acting CEO William Ndlovu, addressed to employees, it is stated that at the beginning of April 2021, the airline was informed that Mango will only receive funds in June 2021.
"This put Mango in a difficult situation as it relates to further extension from the creditors who could not wait any longer to be paid," says Ndlovu. "The lessors then put an ultimatum to Mango that should they not receive their money by 30 April 2021, then all their aircraft must be grounded until such time that Mango receives the funds and is able to pay."
This means that Mango will not be able to operate from 1 May due to no aircraft being available for operations. Ndlovu says in the document that Mango management then put a proposal to the boards of Mango and SAA that Mango temporarily stop operating from 1 May and be put into business rescue until July.
This proposal was approved by both boards and was forwarded to the DPE, as shareholder, for consideration.
"We are still waiting for the response and shall communicate further as soon we get a response from DPE. Therefore, it is with great sadness that I inform you that our operations will temporarily stop from 1 May 2021 until such time we receive funding or complete the business rescue process should it be supported by DPE. We shall update you as soon as possible once we get the feedback," states Ndlovu. "It is at this point that our thoughts and feelings must be geared towards seeing Mango surviving the current storm."
The DPE told Fin24 on Thursday evening that it is in discussions with the boards of Mango and SAA about the repositioning of the subsidiaries in the light of the delayed funding.