Mango subsidised SAA for years, says founding executive

Low-cost airline Mango may have to temporarily suspend operations from 1 May due to a lack of funds.

The Citizen reported on Thursday that an internal communique had been issued to staff advising them of the state of the business.

In it, the acting chief executive William Ndlovu also alludes to likely business rescue. But Mango should not have run out of money, and it should not have been allowed to get to this point.

Aviation investment and advisory expert Barry Parsons, a key member of the team that created and launched Mango and served as its first Head of Commercial, says that Mango should never have been allowed to deteriorate to this position.

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From the airline’s genesis, there was speculation that SAA was subsidising Mango.

“The truth of the matter is that, for many years after its 2006 launch, Mango had effectively subsidised SAA through the high cash-generative ability of its low-cost business model.

“Now, when Mango needs at least some of that cash back, it is no longer available”. Mango’s Benediction Zubane confirmed to The Citizen that the funding lifeline has not materialised to date.

Should Mango exit the market, it marks the first time since 1934 that the South African government has no active aviation interest.

Ghaleb Cachalia of the DA says that “this inept shareholder wants to resurrect an albatross but is unable to keep the one eagle in it has aloft in the skies. Pity they did not listen to Nico Bezuidenhout, but then the ability to listen to sense requires an honest disposition.”

Mango employs 749 staff and rumoured to be circa R 2.5 billion in debt.

ALSO READ: Floundering Mango halts flights to Zanzibar

“It is very clear that Mango has been under financial distress for some time, first on payment delays to SAA Technical in September last year and now, payments to lessors,” says aviation analyst Joachim Vermooten.

“Unfortunately, the national budget has not made provision for challenges faced by the SAA subsidiary and while the DPE has since tried to resolve this, it has not happened. Of course, the country’s financial position is also weak.”

He adds that Mango should have restructured at the beginning of the pandemic.

“Now, that Mango may be in default with debtors, it will be more difficult to restart the business.”

“Connectivity is important for African and International Airlines. It is naturally very sad to see a domestic carrier with such a strong brand in South Africa go through financial challenges.

“The ongoing pandemic and consequently travel challenges are impacting global airlines in the most unprecedented manner,” says Board of Airline Representatives of Southern Africa chair Zuks Ramasia.