Mango threatening unions for wanting to place troubled low-cost airline under business rescue
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Johannesburg - State-owned low-cost airline Mango is threatening unions and their lawyers with legal action for approaching the South Gauteng High Court to have the carrier which is in financial distress, to be placed under business rescue.
The high court on Tuesday postponed the urgent application by the Mango Pilots Association, the SA Cabin Crew Association and the National Union of Metalworkers of SA (Numsa) until Friday.
Numsa and the two associations want the court to urgently place Mango under business rescue.
According to the unions, acting Mango chief executive William Ndlovu informed them earlier this year that due to outstanding funding from its shareholder SAA its lessors were being intolerant of missed payment deadlines.
However, in its response to Numsa and the two associations’ bid, Mango warned them that they may not bring an application to place a company in business rescue proceedings once a resolution has been taken by its board in terms of the Companies Act.
”Your clients are invited to withdraw their application, failing which an adverse costs order will be sought against your clients and your firm,” wrote Mango’s lawyers Werksmans Attorneys to the unions’ legal representatives Stein Scop Attorneys last Thursday.
Mango said the associations and Numsa acknowledge that its board adopted a resolution on April 16, 2021 in terms of the Companies Act to place the airline in business rescue and that concurrence of Public Enterprises Minister Pravin Gordhan was required under the Public Finance Management Act (PFMA) before the resolution could be filed with the Companies and Intellectual Property Commission (CIPC).
The airline also indicated that the resolution to place the company under business rescue was taken well before one of its creditors Aergen Aircraft Four Limited brought its liquidation application on April 28 this year.
Mango is also facing a liquidation application expected to be heard in the South Gauteng High Court, which has been filed by Irish company and one of its lessors Aergen Four Aircraft, which has agreed to postpone its liquidation hearing to later this month to allow Mango time to start the business rescue process.
Numsa and the associations have questioned Mango’s shareholder SAA of desperately needing the unions to withdraw their urgent business rescue application.
”Based on their actions we can presume the SAA board and the Department of Public Enterprises 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,” the unions complained.
Among the explanations for Mango’s decision to opt for business rescue, Ndlovu told the high court that before the Covid-19 pandemic the airline’s operating profit for 2019 was over R977.5 million.
”However, since the onset of the pandemic, the company's operating profit declined for the year ending 2020 to R467m, and declined further for the year ending 2021 to an operating loss of R157.1m,” reads Mango’s answering affidavit filed last Friday.
Mango is opposing the unions’ application and has initiated its counter-application and wants the court to declare as invalid the CIPC’s refusal to process the company's board resolution to be placed under voluntary business rescue.
It has also asked the court to find that the CIPC’s refusal to change to the company's enterprise status to "in business rescue" once its resolution was filed to be declared invalid and wants a declaratory order that its business rescue proceedings became effective from July 28 when it filed the resolution.
Mango wants the CIPC to be directed to immediately change its enterprise status to "in business rescue".
The CIPC has informed Mango that a notice and documents in support of an entity being placed under business rescue must be filed within five business days from date of resolution or else the resolution becomes a nullity and a new notice cannot be filed within a three-month period unless a court approves the filing.