Mango Airlines has temporarily halted all operations from Tuesday till further notice. In an announcement issued on Tuesday, the airline claimed the disruption is due to overdue payments to the Air Traffic Navigation Services.
Mango Airlines to enter business rescue
Mango Airlines, the budget airline failed to stave off business distress and has become the fourth South African company to enter business rescue. Into business rescue, the airline is the latest sign of the pressure that the Covid-19 lockdowns continue to have on the aviation industry. Furthermore, Numsa and the South African Cabin Crew Association plan to sue the airline for not paying salaries and other reasons.
In an interview with a local media , Mango’s head revealed the company would seek bankruptcy protection in the local market. By restructuring its business, the airline would be able to secure liquid capital support from its shareholders. Employee salaries at Mango Airlines, which have not been paid, will also be dealt with during the subsequent weeks of August 2021.
Coronavirus broke out worldwide and caused planes to be grounded. Both Mango and SAA were forced to cancel flights. After emerging from bankruptcy protection, Mango Easy’s shares were sold to private equity fund owners in June, causing controversy over unpaid airport charges.
As one of the state-owned companies that obtained government bailouts, SAA was a heavy burden on the national budget when it left business rescue in April.
During an interview with ENCA on Monday (July 26), Kgokolo explained that Mango’s board and the government had made the decision. He said that consultations with labor group representatives were underway. “It is clear that the board and shareholders are in agreement that Mango will go into bankruptcy,” said Kgokolo. “Our current aim is to seek input from key stakeholders on how to manage that process best.” The union says the airline’s workers have been working without pay since May and that one of its suppliers has filed to liquidate it.
According to the government, it sold a 51% stake in SAA to the Takato consortium in June to revive the airline. In addition, SAA has been allocated R10.5 billion ($706 million). Mango Airlines is awaiting its share of those funds.
Mango employees “cannot avoid joining and fighting with a common goal to rescue jobs and ensure the future of a state-owned enterprise,” the unions stated in a joint statement. In response to questions about delayed group salaries, Thomas Kgokolo stated that Mango’s board of directors and shareholders had resolved to put the company into business rescue.
Even with a special allocation of 2.7 billion rands ($182.3 million) from the South African parliament for various SAA subsidiaries, Mango Airlines is in an impoverished position. As part of an R2.7 billion bailout of SAA subsidiaries, the interim chief executive said there is still some Mango staff waiting for delayed salaries.
As a result, all operations of SAA were mothballed in September 2020 after funds ran out during the COVID-19 pandemic. Since December 2019, the company has been under bankruptcy protection. Almost 80% of the company’s employees were cut when SAA exited a business rescue in April.
The national carrier has relied on state bailouts and government debt guarantees to stay afloat over the previous decade, and it was placed into administration last year. The airline was released from administration after receiving R7.8 billion from the government. There is no clear date specified for when it will resume operations, but the corporation pledges to make an official announcement soon.
In June, the national carrier announced that a local jet-leasing company and a private equity firm would control the majority stake. It is also stated that the airline was delighted to be able to extend its Air Operator Certificate (AOC) as soon as possible, as it was slated to expire on June 30, 2021. The operations of the airline would be stabilized and catalyzed as a result.
Since the COVID-19 pandemic has been on the rise in South Africa, passenger air travel has been badly affected by the South African government’s strict closure policies and restrictions.