There has been a small bit of respite for the cash strapped low cost South African airline – Mango Airlines. After flights were temporarily suspended last week, the South African Airways subsidiary was informed that emergency funding from the state is on its way.
This must have come as a great relief to the company. The carrier is said to benefit from a state bailout of R819 million rand or (US) $57 million. The funds were made available as part of the Special Appropriations Bill tabled in Parliament on May 4 by SA finance minister Tito Mboweni, according to the economic website Money Web.
The allocation is part of the total R10.5 billion rand or (US) $730 million package to finance the rescue of national carrier South African Airways. The allocation also includes R1.663 billion rand or (US) $115.7 million and R218 million rand (US) $15.1 million respectively for South African Airways Technical (SAAT) and Airchefs, the group’s other two subsidiaries. To date, R7.8 billion has been made available to SAA which recently announced it had come out of the business rescue process: SAA, which has just come out of 17 months of structuring.
This breath of fresh air will allow the carrier to clear its debt related to the lease costs of the eleven Boeing 737-700s that make up its fleet. In fact, the leasers had given Mango Airlines until April 30 to pay up this liability – after several moratoriums had come and gone.
According to Mango Airlines CEO William Ndlovu, the funds will not be available until June. Faced with this dilemma, management have proposed to its board of directors, and to that of SAA, to put the company under judicial redress between May and July or until the money arrives.
Mango Airlines flights were briefly suspended due to the non-payment of fees to the Airports Company South Africa (ACSA). After much negotiation, the company finally made a partial clearance and “made new commitments to settle the remaining debt.”