No flights for Mango airline

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Low-cost airline Mango will not resume flights as set out in its original business rescue plan and will have to retrench more employees than anticipated following a meeting of its creditors on Monday.

In a statement following the meeting, Mango business rescue practitioner (BRP) Sipho Sono said that South African Airways (SAA), Mango’s sole shareholder, had proposed a motion for the meeting to be adjourned.

This is to allow for incorporating proposals that would enable the national carrier and the Department of Public Enterprises (DPE) to support the plan.

While drawing up the original proposal, SAA had informed Sono that Mango would no longer form part of its group, meaning that a private buyer would have to be sought to continue funding its operations.

Sono’s plan proposed that Mango receive the outstanding R719 million owed to it as part of a package approved by Parliament to allow it to resume flights during the busy holiday season.

That would presumably have made the airline more attractive to potential buyers.

SAA wants the plan to be amended to only allow for resuming operations once a suitable investor has been identified.

“After deliberation, it was agreed that the meeting should indeed be adjourned for a maximum of 15 business days to consider and effect the proposed amendments and thereafter reconvene the meeting of creditors in order for the affected persons to consider and vote on the amended plan,” Sono said.

As a result, Sono said Mango would be “mothballed” for a considerable period as it would take some time to find a buyer.

Mango Airlines

In addition, Sono said the amended plan would result in more retrenchments. Initially, around 300 of its 700 employees were to receive voluntary severance packages.

Sono had already initiated a process to invite employees to apply for voluntary severance packages (“VSP”) as part of mitigating the need for retrenchments in terms of section 189 of the Labour Relations Act.

“This aspect of the plan will continue, and the BRP was assured by SAA and the DPE that funds will be released during the course of this week, or at worst early next week, to implement the VSPs,” Sono said.

Mango still intends to issue vouchers to travellers with unflown tickets to use once it resumes flights, but Sono said he could not commit to a specific date from which these would be valid.

“Customers are encouraged to opt for an opportunity to use their tickets once Mango resumes operations,” Sono said.

“Those customers wishing to convert their tickets to claims will regrettably receive the same dividend that is offered to concurrent creditors,” Sono added.

Under the original business plan, it was envisaged that creditors would receive 5.23 cents for every rand owed to them. That means the holder of a R1,000 ticket would only be refunded R52.30.

A spokesperson for the Mango Pilots’ Asssociation told MyBroadband the adjusted plan would likely result in even less being paid to creditors.

Main Image: The Citizens

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