The case for whether faltering airline Mango, a subsidiary of South African Airways, will go into business rescue or face liquidation comes before the South Gauteng High Court today. Photo: Supplied.
THE CASE for whether faltering airline Mango, a subsidiary of South African Airways (SAA), will go into business rescue or face liquidation comes before the South Gauteng High Court today following the filing of an urgent application from organisations seeking to have the low-cost carrier placed in business rescue as opposed to management’s desire to have it liquidated.
The Mango Pilots Association, the South African Cabin Crew Association and the National Union of Metalworkers of South Africa have approached the court to rescind liquidation proceedings and are seeking to have Ralph Lutchman appointed as the business rescue practitioner.
The organisations have said the failure by the Department of Public Enterprises (DPE) to provide funding has placed the airline’s future in jeopardy; hence the need for drastic action aimed at saving the livelihood of more 740 workers who are owed eight months’ salaries.
Last week, labour organisations blasted the interim chief executive of SAA, Thomas Kgokolo, alleging he had withheld funding for salaries, to blackmail workers into withdrawing business rescue proceedings, so the airline could be given for a song to the Tsakato consortium, which was mandated as a major equity partner in SAA.
“Based on their actions, we can presume the SAA board and the DPE have decided that Mango must die so that Lift, its competitor, can dominate as a low-cost carrier. Global Airways is a partner of the Takatso consortium, which is due to take over at SAA. Global Airways owns Lift,” they allege.
But SAA has stated in its papers that it has been significantly affected by the unprecedented economic effects of the Covid 19 pandemic and the travel bans.
The airline said in an responding affidavit that the Covid-19 restrictions have knocked travel, resulting in an operating loss in the current year.
Mango said it was forced to suspend all flights from March to June last year and generated no revenue in that period.
Prior to the pandemic, in the 2019 financial year it achieved an operating profit of R977 508 604, which declined in the 2020 financial year to R462 820 562 and declined further for the year to the end of 2021 to an operating loss of R157 142 929.
Mango said the company required about R800 million to fund its obligations and working capital requirements.
“It, therefore, appears to be reasonably unlikely that the company will be able to pay all its debts as they fall due and payable within the ensuing six months,” Mango said.
This is as Mango management, in their replying affidavit to the court, stated that the DPE had no intention of keeping Mango in the sky. A letter dated April 30 from the SAA board’s interim chairperson states: “Various options available to the Interim SAA board were shared by the DPE, and those included liquidation, wound down, business rescue and cessation of operations. The department favoured winding down and minimising any serious negative impact on sectors of society.”
Labour said Mango attempted to resurrect a board resolution from April 16 and place Mango in voluntary business rescue. The Companies and Intellectual Properties Commission (CIPC) supported the view that this resolution was not valid and rejected Mango’s filing.
Mango, which has now added the CIPC as a third party to the High Court hearing, and in another strong arm attempt, has threatened both the unions and CIPC with legal costs if they did not capitulate.
BUSINESS REPORT ONLINE