Mango Airlines (JE, Johannesburg O.R. Tambo) is to be mothballed from May 1 until such time it receives funding from the South African state, which has been asked to place its low-cost carrier into bankruptcy protection until July 2021.

This is according to a leaked internal memo to staff by Mango’s Acting Chief Executive Officer William Ndlovu on April 22, in which he disclosed that the government had been asked to support decisions by both Mango’s Board and the interim Board of mother firm South African Airways (SA, Johannesburg O.R. Tambo) to put the cash-stricken carrier into business rescue.

Asked for comment, Department of Public Enterprises (DPE) spokesman Richard Mantu said: “The Department is in discussions with the Board of Mango and (Interim Board of) SAA about the repositioning of the subsidiaries in light of the delayed funding.”

DPE has been trying to divert ZAR2.7 billion rands (USD188 million) of an allocation of ZAR10.5 billion (USD733 million) to implement SAA’s business rescue plan to its subsidiaries, which includes Mango. However, a cash injection for Mango was not provided for in SAA’s business rescue plan, which did however state that the carrier by 2020 needed recapitalisation of ZAR1 billion (USD69.8 million).

According to Ndlovu’s memo, Mango’s predicament results from the promised state funding now only expected to become available in June 2021, despite budget approval in October 2020, whereafter the money was supposed to have been received by January 2021.

“We engaged with all the creditors and requested that we be given up until January 2021 to settle what is due to them, and this was granted. However, due to reasons unknown to us, we did not receive the funds in January 2021. We engaged the relevant stakeholders and were told to wait, maybe in February 2021, the money will come, and we are now In April, with no sign of money. At the beginning of April 2021, we were then informed that Mango will only receive funds in June 2021. This put Mango in a difficult situation as it relates to further extension from the creditors who could not wait any longer to be paid."

“The lessors then put an ultimatum to Mango that should they not receive their money by April 30, 2021, then all their aircraft must be grounded until such time that Mango receives the funds and is able to pay.”

“We have been told by the shareholder that there will be no money received by Mango until June 2021. This means that Mango will not be able to operate from May 1, 2021, due to no aircraft being available for operations.”

Mango operates a fleet of fourteen B737-800s, of which six are leased from Macquarie AirFinance, four from Carlyle Aviation Partners, and four from GECAS, according to the ch-aviation fleets advanced module.

“Management then put a proposal to the Board of Mango and SAA and proposed that Mango temporarily stop operating from May 1, 2021, and be put into business rescue until July 2021. This proposal was approved by both Boards, and the SAA board has forwarded this to DPE to support the Board's approval as an ultimate shareholder. We are still waiting for the response and shall communicate further as soon we get a response from DPE.”

“Therefore, it is with great sadness that I inform you that our operations will temporarily stop from May 1, 2021, until such time we receive funding or complete the business rescue process should it be supported by DPE,” the memo concluded.

Editorial Comment: Correcting date to May 1, 2021. - 23.04.2021 - 06:15 UTC