Budget airline Mango abruptly suspended flights on Tuesday after it failed to make outstanding payments for navigation services to SA’s air traffic management company.
The SAA subsidiary announced on Monday that it planned to enter into business rescue, an alternative process to liquidation that places management of a company in the hands of business rescue practitioners, who can delay paying creditors while they re-establish the company on a sound financial footing.
The low-cost state-owned carrier’s CEO, William Ndlovu, informed Mango’s customers on Tuesday that the airline would suspend its flights until further notice. It had failed to pay money owed to Air Traffic Navigation Services (ATNS).
“Senior management and our shareholder are locked in discussions to find an amicable solution to this impasse,” Ndlovu said.
This is the second time in 2021 that Mango has been unable to pay its obligations to its vendors including fellow SAA subsidiary, SAA Technical and Airport Company SA.
Flights resumed in April following an intervention by the public enterprises department.
The airline will be placed in business rescue according to SAA interim CEO, Thomas Kgokolo. The process, however, is yet to be approved by the courts because the airline has not filed an application.
Labour unions at Mango have blamed the airline's dire financial straits on the management of SAA and the public enterprises department.
In an urgent court application to place the airline in business rescue the National Union of Metalworkers of SA (Numsa), SA Cabin Crew Association (Sacca) and the Mango Pilots Association say although all parties were in agreement that the airline should be placed in business rescue, the SAA management and the airline’s shareholder were slow to act, further entrenching the company's ongoing financial challenges.
Placing the cash-strapped company in business rescue would save jobs and ensure that creditors are paid and the company's assets remain intact as opposed to liquidation proceedings, which would result in the company ceasing to operate it assets then being sold and distributed to creditors.
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’s more than 700 employees have not been paid their full salaries for June and July and are owed at least six months salaries, according to unions.
SAA spokesperson Vimla Maistry says any potential retrenchment of employees at Mango will be decided by the airline’s business rescue practitioner who is yet to be appointed.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.