SAA has resolved to sell its subsidiary Mango Airline and divest from the low-cost carrier as part of its restructuring, but the decision has angered some workers unions.
This comes after a majority of Mango creditors yesterday voted in favour of the amended proposed business rescue plan for the low-cost airline.
About 84% of creditors voted in favour of the proposed plan by the business rescue practitioner (BRP) Sipho Sono.
According to the amended plan, SAA will withdraw from Mango and sell 100% of its shares to private investors.
The State-owned carrier will begin a process of finding an investor for Mango with the hope that an investor will be found by March.
Last month, SAA adjourned a meeting of creditors on November 15 for the previous plan to be reviewed and for an amended version to be presented as it did not believe that plan was feasible.
SAA said there were no reasonable prospects of Mango succeeding should it be operationalised prior to obtaining an investor or equity partner.
Earlier this year, the National Treasury approved R819 million for Mango from a special allocation approved by Parliament from R10.5 billion given for SAA’s business rescue process.
But Mango has found itself in a catch-22 situation as SAA stipulated that the funding it provides cannot be used for Mango to resume operations.
Mango has so far received only R100m from the allocation and used that for payment of salaries since July.
In July, Mango went into voluntary business rescue and has not flown since.
A total of 553 of Mango’s 708 employees have since applied for voluntary severance packages (VSPs) offered as part of the airline’s business rescue process.
Mango has not made a profit for years, and has liabilities in excess of R2.8bn.
The airline’s only asset on the balance sheet is a spare engine bought from SAA which has a current book value of R97m.
Independent aviation economist Joachim Vermooten said this was part of the new beginning for Mango and it put the airline in “a better position” to restart operations.
Vermooten said this seemed to be a much clearer position by the BRPs, which also meant that Mango was no longer going to be part of SAA’s future funding plans.
“It’s the right way to go. The decision by creditos actually means Mango is now cleared of its legacy debt, including debt incurred during Covid-19 period,” Vermooten said.
“The company has not been revalued in that it has a clean balance sheet. The valuation is whatever the new investors will like to put in as investment to restart or continue operations.”
Vermooten said this was a “far better outcome” for Mango employees as they had already applied for voluntary severance packages compared to the drawn-out process experienced by their SAA colleagues.
But trade union Solidarity expressed its dissatisfaction with Mango’s business rescue plan yesterday.
Solidarity’s sector co-ordinator of defence and aviation Derek Mans said the State’s interference and the implementation of poor business decisions had left Mango in a poor state.
Mans said employees at the airline were now paying the price for the poor decisions of the past made by the government.
“We are in a situation again where ideology and centralisation take precedence over sound business practices and sound economic decisions,” Mans said.
“The result is that thousands of people are now without work while such a situation could very well have been prevented.”
BUSINESS REPORT