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It is now obvious that low-cost airlines are the way to go. Mango will be put on hold for a long time since finding an investor will take time, according to Sipho Sono, the low-cost airline’s business rescue practitioner, who said after a meeting of creditors who were meant to vote on his suggested rescue plan.
The creditors’ meeting scheduled for Monday to vote on Mango’s planned business rescue plan was postponed because its majority shareholder, state-owned South African Airways (SAA), requested an amendment.
According to Sono, an amended plan will obviously have to reflect a larger number of employees who may be affected by the restructuring than the current planned plan, which was released on October 29, 2021.
When Mango, a subsidiary of SAA, entered into business rescue at the end of July, it ceased operations. It is around R2.5 billion in debt, and if its return to the sky is delayed, it risks losing its route rights. Sono wanted Mango to resume operations in December to take advantage of the peak summer traffic, according to the current suggested rescue plan.
He planned to use some of the R719 million owed to Mango from a special allocation granted by Parliament from the R10.5 billion set out for SAA’s own rescue plan. The Department of Public Enterprises, which owns SAA, was in charge of the special allocation process.
The board of SAA, on the other hand, made it plain that it is only willing to provide funds for Mango’s reorganisation, not for the company to resume operations. SAA is looking for a backer to help fund a relaunch.
The planned plan will now be changed to reflect this, and a creditors’ meeting will be convened as soon as possible. “SAA, in its capacity as the sole shareholder of Mango, proposed a motion for the meeting to be adjourned to incorporate certain proposals that will enable both SAA and the ultimate shareholder, namely the Department of Public Enterprises (DPE) to support the plan.
The substance of SAA’s proposed amendment is that the plan be amended to effectively cater for resumption of operations only once the process of securing an investor has been concluded, with a preferred bidder having been identified,” Sono explained in his statement on Monday afternoon.
Story by : Norvisi Mawunyegah