Multiple discussions between low-cost SAA subsidiary Mango Airlines and SA’s air traffic management company over outstanding payments came to nought, resulting in the airline indefinitely suspending its flights on Tuesday.
Air Traffic & Navigation Services (ATNS) CEO Dumisani Sangweni said ATNS and Mango had agreed on payment arrangements that would ensure Mango was able to operate “without putting further financial strain on its cash flows and to limit ATNS’s debt exposure”.
These payment arrangements were, however, not honoured by the cash-strapped budget airline despite numerous attempts to remedy the situation, Sangweni said, leading to ATNS withdrawing its services to Mango.
“ATNS is willing to continue rendering services to Mango on condition that the account is paid in full and all current and future billing are paid for as and when it becomes due,” he said.
ATNS operates at nine of the airports owned by Airports Company SA (Acsa). Its services include air traffic, navigation, training and associated services used for flight planning purposes. Without these services, airlines may not legally and safely operate their aircraft.
Mango owes ATNS a “sizeable” amount of money, Sangweni said. It is, however, unclear when the debt can be repaid. Mango CEO William Ndlovu on Tuesday informed customers that the airline and the government are in talks to resolve the impasse.
This is the second time this year that Mango’s flights have been suspended due to nonpayment to its creditors. In April, the airline’s fleet was grounded over outstanding payments to Acsa. Flights resumed after an intervention from the public enterprises department.
The suspension of Mango’s flights follows the announcement by SAA interim CEO Thomas Kgokolo on Monday that the airline would be placed in business rescue. Business rescue would ensure the company recovers, as opposed to liquidation where the company ceases operations and its assets are sold off to pay creditors.
In business rescue, Mango’s operations would be handed over to a business rescue practitioner who can delay paying creditors while they re-establish the company on a sound financial footing.
Court documents filed on Monday by labour unions the National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca) show that the Mango board resolved in June to place the company in business rescue subject to the approval of SAA and the department of public enterprises. The unions, however, accuse the SAA management and the airline’s shareholder of dragging their feet over the matter, worsening the company’s ongoing financial challenges.
The company’s financial sustainability report presented to creditors, unions and the shareholder earlier in 2021 shows that Mango’s debt has increased to R2.5bn in 2021 from R1.8bn in 2020.
Mango is due to receive R819m of the R2.7bn allocated by the government to SAA subsidiaries SAA Technical and Air Chefs as part of the Special Appropriations Act that was gazetted in June. However, the funds have not been transferred to the three companies.
If these funds were not received by the first week of August, Sacca president Zazi Nsibanyoni-Mugambi said, Mango would be forced to cease operations, leading to huge job losses.
Business Day understands that the funds have not been transferred to the subsidiaries because the department is yet to receive approval from the Treasury to roll over the unspent funds to the 2021/2022 financial year in accordance with the Public Finance Management Act.
According to the act, government departments are required to submit requests to the Treasury to roll over funds by the end of May each year to finalise projects that are still in progress, or for other capital purposes.
The department’s Richard Mantu said the government hoped to resolve the impasse soon.
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