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Mango shelves plans to haul SAA to court over R400m payment

A Mango Airlines aeroplane docked on the tarmac at King Shake Airport. Picture: Karen Sandison/African News Agency(ANA)

A Mango Airlines aeroplane docked on the tarmac at King Shake Airport. Picture: Karen Sandison/African News Agency(ANA)

Published May 13, 2022

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Johannesburg - Threats by the grounded state-owned low cost airline Mango to take its parent company, SA Airways (SAA), to court over the non-payment of nearly R400 million have been shelved.

Mango’s business rescue practitioner and chartered accountant Sipho Sono told Independent Media this week, that the dispute between the national carrier and the airline was close to being resolved.

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”It’s getting resolved, it’s close to resolution,” he assured.

According to Sono, the matter was no longer going to court as reported in his last status report on the business rescue proceedings.

Mango had threatened to head court to force SAA to release the R399m it had been promised as part of the business rescue process.

In his report, dated April 30, Sono said that although the Department of Public Enterprises transferred the balance of the R399m its parent company to date the equally troubled national carrier had only transferred R89m to Mango.

“The government released the funds to SAA but the national carrier has so far only paid its subsidiary R89m, which then forced Mango to announce that it would approach the courts on an urgent basis to force SAA to immediately transfer the balance of funds unconditionally and without delay”.

Sono said Mango which has been grounded since last year, needed the funds for certain urgent payments.

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”SAA has instead indicated that the Department of Public Enterprises has imposed certain conditions attaching to the balance of funds, which conditions, in the opinion of the business rescue practitioner, are unjustified and do not find application in the approved business rescue plan,” he explained.

Sono added that he had briefed legal counsel with the objective of approaching court on an urgent basis for declaratory relief for SAA to transfer the balance of funds to Mango unconditionally and without delay.

However, the threatened legal action has since been put on hold as there is a solution in sight, according to Sono.

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In the report, the business rescue practitioner also gave an update on the progress in the payment of voluntary severance packages for Mango’s employees.

Sono said a retrenchment agreement with all parties (unions) in terms of the Labour Relations Act had been reached at the Commission for Conciliation, Mediation and Arbitration (CCMA).

”Following signature of the retrenchment agreement, the company (Mango) issued termination notices to all affected employees and applied for tax directives, which directives have been received from SA Revenue Service.

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The company will process the final retrenchment packages for employees on Monday, May 9, 2022,” he wrote.

Mango received four unnamed bids to buy the airline, Sono reported, but only two were found to substantially meet the set requirements.

“The process dictates that a preferred bidder and a reserve bidder will therefore be selected and notified but if the preferred bidder is unable to fulfil the conditions of the transaction agreement, the reserve bidder will be approached to conclude the transaction.”

Sono expressed concern that the refusal by SAA and/or the department to transfer the balance of funds could have a negative impact.

”In the event that the transaction cannot be concluded, the business rescue practitioner will have to implement the wind down plan that is incorporated in the business rescue plan,” he warned.

Sono still remains confident that there is a reasonable prospect of rescuing Mango or that the business rescue proceedings will result in a better outcome for creditors and the shareholder than would otherwise be achieved should the airline be placed in liquidation.

Related Topics:

Mango AirlinesSAA

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