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HOW MUCH MANGO OWES

BOTTOM LINE: AIRLINE OWES OVER R1BN TO SAA AND SAA TECHNICAL

Moneyweb

Excluding taxes and salaries, 52% is owed to SOEs.

The business rescue plan for Mango Airlines accepted by 84% of creditors on Thursday makes for fascinating reading. It owes a lot of money to other state-owned enterprises (SOEs) and organs of state.

Much of this is as a consequence of government never resolving the fact that it was operating three separate state-owned airlines – South African Airways (SAA), Mango and SA Express.

This has created a situation where Mango now owes over R1 billion to SAA and SAA Technical, which have just emerged from business rescue.

In effect, much of government’s funding allocated to the airline under parent SAA’s business rescue process, will now be used to implement Mango’s business rescue plan (in other words, not for working capital or to restart operations).

SAA will make an equity injection of R719 million and thereafter relinquish its shareholding to government as the board of SAA “endorsed management’s assessment that Mango Airlines does not fit into the future business strategy of SAA”. The Takatso Consortium has confirmed it also has no interest in Mango.

In total, Mango owes R2.8 billion to creditors.

Of this, R2.5 billion is owed to so-called “concurrent” creditors (who hold no security over the amounts owed to them).

The airline owes the South African Revenue Service (Sars) a total of R97.4 million, primarily in unpaid pay-as-you-earn or PAYE tax (R34.6 million), customs (R47.6 million) and VAT (R11.4 million). The plan says the “Sars claim will be compromised through settlement/expunged”.

Mango owes a further R159 million to employees in salaries and leave pay. The rescue plan says the airline has 708 employees, and that because the company “will not be resuming operations”, it is necessary to “rationalise its workforce”.

It has initiated a voluntary severance programme. The business plan cautions if the uptake of this is low, the airline “may have to retrench some if not all of the workforce”.

Since being placed in business rescue, employees have been paid their full salaries for July, August, and September.

In October, employees received 50% of their salaries and “the balance (R12.8 million) will be paid soon after receipt of further funding expected from the shareholder”. It is intended that employees will receive their unpaid remuneration and severance packages in full.

A remarkable 52% of the total amount owed to concurrent creditors (R2.6 billion) is due to SOEs or organs of state.

Lessors are owed a total of R652 million, or 25% of total concurrent claims.

Mango owes a further R299 million, or 12% of the total, to Lufthansa Technik which would’ve provided aircraft maintenance services to the airline as SAA Technical increasingly became unable to do so.

Service providers such as Bidair (R5 million) and Menzies Aviation (R16.4 million) are owed far smaller amounts, as is Lanseria International Airport (R14 million). The grounded “mothballed” airline even owes R1.87 million to Google.

Concurrent creditors can expect a payment of 4.43c in the rand under the current plan.

This means that, for example, SAA and SAA Technical will receive a payment of R49 million of the R1.1 billion owed.

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2021-12-04T08:00:00.0000000Z

2021-12-04T08:00:00.0000000Z

https://thecitizen.pressreader.com/article/282291028518744

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