Man, which way will it go? Battle over low-cost airline gets complicated

Battle lines are being drawn at Mango, which now finds itself the subject of two opposing proposed business rescue processes, one led by the embattled low-cost carrier’s unions and the other by its board and parent company SAA.

The National Union of Metalworkers of South Africa (Numsa), the South African Cabin Crew Association (Sacca) and the Mango Pilots’ Association (MPA), which are due to have their urgent application to have Mango placed in business rescue heard in the South Gauteng High Court on Tuesday, said they don’t believe SAA, Mango or the public enterprises department have any serious intention of saving the airline.

They said SAA, Mango and the department want low-cost carrier Lift, which is owned by Global Airways, to become the dominant low-cost carrier. And this, they say, would be at Mango’s expense.

Global Airways is part of the Takatso Consortium, which is the department’s preferred strategic equity partner to take a 51% interest in SAA.

Contacted for comment, Takatso CEO Gidon Novick said the consortium was “in the midst of the due diligence process with SAA” and that “good process is being made and the parties are working together”.

Mango is opposing the unions’ urgent business rescue application.

Last week SAA acting CEO Thomas Kgokolo confirmed Mango would go into business rescue and that SAA and Mango were finalising who would be appointed as the business rescue practitioner.

He said Mango was still part of SAA’s domestic flying plans, while the department of public enterprises said last week it supported Mango entering business rescue because this was a better option than liquidation.

However, Business Day reported on Sunday that an attempt by Mango to be voluntarily placed in business rescue last week Wednesday had been rejected by the Companies and Intellectual Property Commission (CIPC) on the grounds that an application to be placed in business rescue must be filed five days after a board resolution to do so. The application to the CIPC was based on a board resolution from April 16.

Mango, which has added the CIPC as a third party for Tuesday’s hearing, said in its responding court papers that the CIPC was “simply not empowered” to “decide unilaterally” to “refuse to process a business rescue resolution on the basis that it was adopted more than five days prior to the filing”.   

The unions, whose choice for Mango’s business rescue practitioner is Ralph Lutchman, said they don’t trust SAA, Mango or the public enterprises department’s intentions, asking why, if they were keen on business rescue, the application by the unions was being opposed.

They also said that in its responding affidavit, Mango stated that the public enterprises department had indicated it preferred a wind-down for the low-cost carrier instead of a business rescue.

Numsa national spokesperson Phakamile Hlubi-Majola said on Monday: “We are suspicious. If they (SAA, Mango and the department of public enterprises) are saying they want the same thing that we do, why then don’t they just join our (unions’) application? Why must we withdraw our application?

“We don’t believe them when they say they are interested in business rescue. And the reason we can say that is if they did, then they would join our application. One of the things they have a big problem with is that we want the court to appoint Ralph Lutchman, a business rescue practitioner of our choice. Even if they decide to do their own process and nominate their own person, we want our own person there too.”

She also accused SAA’s Kgokolo of withholding shareholder funding to pay Mango staff salaries to “blackmail” unions into withdrawing their business rescue application.

However, contacted for comment, SAA said it too was concerned about the “unpaid salaries of Mango’s employees”, but that it had not received any monies earmarked for the subsidiaries and that it continues to “work with the DPE (department of public enterprises) for a solution”.

In a joint statement released late on Sunday night, the unions said it had “now become abundantly clear in the evidence supplied by Mango management in their affidavit, to the court, that the DPE had no intention of keeping Mango in the sky”.

They cited an April letter written to public enterprises minister Pravin Gordhan by SAA’s then interim chairperson, Geoff Qhena, and included in Mango’s responding affidavit, which stated that “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 letter said “the department favoured winding down and minimising any serious negative impact on sectors of society”.

“It is clear from the above that had we as unions not proceeded with our urgent application [for business rescue], Mango would be winding down because the original intention of the shareholder is to shut down the airline,” said the unions.

“What has not been clear until now is why SAA, as Mango’s shareholder, so desperately needs the unions to withdraw their urgent business rescue application? 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,” they said.

The department of public enterprises said it would not comment on the matter, with Mango also saying it would not do so at this stage.