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How not to run an airline …

The mismanagement of Mango is bordering on criminal.
Difficult take-off. Image: Moneyweb

It’s difficult to imagine a worse outcome for Mango, the low-cost carrier seemingly on life support.

Running an airline hinges on confidence. Prospective passengers need to be confident your planes are safe, and that your flights will actually take off.

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With Mango, there have been increasingly loud murmurs regarding maintenance of late, and the events of the past few days have basically shattered whatever confidence was left.

Two weeks ago, it was still accepting bookings for May onwards despite its own management having doubts over being able to operate post the end of April. This is the very definition of reckless trading.

Reckless

Things came to a head when a letter to staff from the airline’s acting CEO William Ndlovu leaked.

Never mind his incoherent ramblings about vibrations, frequencies, and the power of prayer, the letter made it clear it would halt operations on May 1. At that point, it finally stopped accepting bookings beyond April 30.

Then, on Wednesday Mango flights did not take off as scheduled in the morning.

The airline apologised for “flight interruptions” at 6am but gave no other information. It emerged during that morning that Acsa (Airports Company South Africa) barred Mango from taking off as the airline had not kept up with its payment plan to settle debts owed to the airport operator.

Not part of the plan

Frantic meetings between those parties and ‘the shareholder’ (the Department of Public Enterprises) resolved the impasse and Mango operated “flights” to Durban at 20:30, returning to OR Tambo “just before curfew”.

Following additional frantic meetings with ‘the shareholder’ on Thursday and Friday, the funding crisis was resolved and the airline announced just before 5pm that it would continue “to operate as normal” in May “and beyond”.

(At least the mystery of how SAA rapidly and unexpectedly exited business rescue this week is solved – the business rescue practitioners refused to allow bailout funding to flow to subsidiaries as they were not in the original plan.)

No room to idle

The issue here is that running an airline is fundamentally different to running a factory or a mine, something government simply does not comprehend.

A factory or mine can stand idle for a month while its management and government bicker over funding. An airline can’t.

Now that confidence in Mango has all but evaporated, social media is full of worried ticketholders. And who in their right mind will book a ticket in May “or beyond”?

Taxpayers ought to be concerned about how big the hole in Mango’s accounts is.

The Comair business rescue required R500 million of fresh equity and R1.4 billion in additional funding from lenders. Last year, Mango said it needed recapitalisation of R1 billion.

Given that Mango owes Acsa a lot of money (it was in debt before the pandemic hit) and its lessors even more money, it is quite conceivable this figure is now significantly higher than R1 billion.

Lots of questions

How it landed in this mess is unclear.

When SAA effectively withdrew from the domestic market, it handed all that demand to Mango on a golden platter.

Fast-forward to now and it’s operating three return flights a day to Cape Town and two to Durban, with roughly daily service to Port Elizabeth and five flights a week to George. The lucrative Zanzibar route has been halted (one of the few destinations South Africans can travel to and not quarantine upon arrival), although the airline has assured there’ll be an update on this soon.

This schedule hardly requires 14 aircraft, which is the number it is ostensibly currently leasing. A few of these, Moneyweb understands, have been grounded for maintenance for some time. But what of the rest? No wonder it’s burning through cash at the rate it is.

There are obvious winners in this mess.

Competitors strike

FlySafair and Comair continue to gobble up demand on the major routes, while Airlink and Cemair have gobbled up demand on secondary routes (to places like Bloemfontein and Port Elizabeth) and have effectively ensured that there is no market left for whoever ends up owning SA Express.

And there’s enough demand on the main routes of Joburg-Cape Town and Joburg-Durban that these smaller airlines have started operating on those too. FlySafair and Airlink both want to start flying to Zanzibar. When they do, Mango will struggle to remain profitable on that route.

Because of the chaos and uncertainty surrounding Mango in the past two weeks, one can imagine a scenario where it struggles to fill its planes, resulting in another cash crunch, meaning a bigger bailout will be required.

Will government continue throwing good money after bad?

COMMENTS   44

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Just another SOE ran into the ground by inept people appointed by Government !!!

Yep.interesting how these thieves never go to jail

Following standard Cadre protection procedures.

How not to run an airline, is a paragraph out of the chapter of How not to run a SOE, which is chapter out of How not to run an country.

The ANC have stolen the future of all South Africans through their corrupt actions.

Not a bad pun, but sad if an SAA or Mango aircraft “runs into the ground”. On the cards though.

How I read the news this “runs into the ground” might become very literally!

For sure! The JET FUEL account has seemingly ALSO not been paid! They’re now going to do what motorists do: idle downhill…

With all the recent experience exodus from SAAT that sadly seems much closer to reality than we might think. I’d be surprised if there are still enough licensed AME’s left to operate legally. Perhaps that is something that the CAA will sweep under the rug, just like the vaccine flight fiasco?

Given that we have strict laws in place ito Corporate Governance and Company Laws, If the Government were a multi national company, the ministers directors and the Municipalities employees, the way it’s run currently constitutes a crime ito the Companies act

All parastatals bankrupt, yet they, the heads of these Government enterprises, continue unabated and unchallenged with running them as though they own them, raping them of much needed resource..with no recourse (The Zondo Commission a farce)

But because it’s Government and run by the ANC, seems to give them the mandate to do as they please

Sooner or later we’re going to hit a brick wall and fall into a dark abyss

The chaos and uncertainty at Mango reflect the chaos and uncertainty in Luthuli House, which in turn represents the chaos and uncertainty in the minds of the average ANC supporter.

When morally and intellectually bankrupt voters determine government policy, then it will result in the bankruptcy of the government. The bankrupt SOEs, rundown municipalities, failing government departments, and unaffordable Debt/GDP ratio plus the disastrous unemployment figures prove the shocking levels of ignorance and lack of cognitive ability of the average voter.

The government can devalue the currency to service the debt, but there is no cure for the stupidity of socialist voters. This implies that democracy will deliver an equilibrium between the purchasing power of the currency and the levels of education and mental capacity of the average voter. This process is ongoing in Zimbabwe, Venezuela, and South Africa.

another textbook case where “liberation movement” credentials bought unwavering support even in the face of such rottenness and failure to govern. democracy cannot simply be “switched on” in a country; the population needs to go through a process of enlightenment and education to be able to make the right choices. that said, there seems to be a regression globally looking at the absolute plonkers running for high offices around the globe…..

Terrorists cannot govern — They can only destroy — See SA for proof !!!

anc Transformation almost complete.

And we the taxpayer will fund this disaster without having a say. Flies in the face of corporate governance.

Ask SAA they can show you how NOT to run an airline AND KEEP GETTING FUNDING

It was never about running an airline but all about self enrichment of ANC cadres, family and friends.

Just love this!! So after Nico left the building about a year ago, the airline has been run into the ground..

Just a word of note: Mango’s fleet consist of old SAA planes. SAAT is responsible for servicing these planes and must have consignment stock, which is not the case.
Never fly Mango!!!!!

What is consignment stock? How does it work – rotate serviced aircraft with unserviced ones? Please explain so us plebs also know what’s going on. (I guess I can swop my Mango ticket for a ride on the Big Wheel in the local fun park?)

100% – I will NEVER EVER under any circumstances fly SAA/Mango again ….

How can you not pay employees. What happened to covid ters. What happened to covid relief fund?

The truth is our Government can’t even run a farm with 3 chickens and a goat.

Yes they can but the 3 chickens and one goat will starve to death.

Many years later when the case eventually gets to court it will simply be dismissed.

As proven by Thandi Modise on her farm and confirmed with the Life Isidemeni disaster.

Ask Thandi Modise.

Hey Cheetah — She is a standout farmer of very high regard in ANC circles due to her unbridled successes !!

Flying customers usually vote with their wallets so not sure it is a given they will abandon Mango unless it has multiple ‘outages’ or a major maintenance incident.

Worth keeping in mind that the whole SAA operation wasn’t very ‘clean’ prior to 1994. I recall the alleged dirty tricks they pulled against one of the first credible private domestic airlines on major routes – Flightstar – between 1990 & 1994.

And Nationwide Airlines……however to be fair at least SAA did not cost the taxpayers sizeable bailouts time and time again. The CEO was usually an experienced airline vet. But their ethics were often questionable.

For SURE – SAA has always been the darling of the Nats, and later of the Cadres: how do you suppose it lost R1bn to Comair in an unfair competition ruling at the Competition Commission a couple years back? But the Nats didn’t have a Competition Commission as far as I remember. And even so, despite the R1bn fine, SAA was already too plundered by Cadres by then to be able to pay.
The MOST worrying thing if Mango carries on with the sham -no audited financial statements – is that now it’s no longer SAA being bankrolled by tax payers, but Mango and the other two subsidiaries. Hopefully Mango staff strike for salaries very soon and a creditor sues very soon! That should bring the pack of cards down once and for all.

At least SAA flew with competent people in the organisation during your infamous “apartheid years”

I am so sad for the staff! I have always enjoyed flying Mango. And the pick pockets will just move on to plunder another SOE, while the hard working staff are cast aside.

Oh, the staff aren’t worse off than millions and millions South Africans hit by the financial impact of Covid. In fact, compared to millions in the private sector, civil servants (which is what they really are at Mango) are still far better off. Yes, tough to work for no money, but as a tax payer I REFUSE to bankroll a Mango salary! FlySafair and Comair are my airlines of choice and if the cadres force me by abusing my tax, they must put that tax towards FlySafair staff salaries.
Hopefully the private low cost airlines are URGENTLY standing together to drag Mango to the Competition Commission for unfair business practice!
We will NOT cooperate with Kieswatter while taxes are abused like this!

I see that the other MW readers have not commented on “Never mind his incoherent ramblings about vibrations, frequencies, and the power of prayer, the letter made it clear it would halt operations on May 1”. Please let us see the letter it will give us some perspective to what we are dealing with. If this were a private company and the CEO did stuff like this the share price would tank immediately.

However comment above “A factory or mine can stand idle for a month while its management and government bicker over funding. An airline can’t.” I beg to differ that it is no different and this type of behaviour would also sink those companies.

As the CEO so aptly states ONLY PRAYER WILL SAVE MANGO. That means there’s no mortal being that can save this monumental failure.

What about Gordhan? Word has it he’s enrolled for a pilot licence to fly a hot air balloon.. it’s known as “restructuring.”

When you are obsessed with race you cannot run anything!

Oh, AND did you know these Mango flights that would would, according to the Mango/ DPE/ Gordhan Cadres “operate as normal from 1 May,” got stuck with no jet fuel FIRST THING Saturday morning, as May 1 arrived!!!!
And ticket holders on the Mango flight between George and Joburg had to sit and count sheep for almost three hours on George airport while the CADRES held urgent talks to get hold of some money towards an obviously long outstanding FUEL account!!

Indeed, Mango operations are back to normal i.e. Cadre Normality! Ticket holders must just take extra cash on every flight (or a can of jet fuel) if they want to leave on time!

From the ashes shall rise yet another Comrade Air (Lemon- this time) with more promises of onboard chicken, maybe with the Colonel’s help. – or a ‘licken’ partner.

This is not the end, it’s the end of the beginning.

Maybe call the next one ‘Yebo-air’?

‘Deja Vu’?

Just saw Flight Centre travel agent on Saturday already advised their customers to avoid Mango Tickets and rather book with alternative low cost airlines.

And the George JHB Mango massive flight delay Saturday morning when Mango hadn’t paid its fuel account, is carried front page by Die Burger today – so it’s not fake news!

WHAT DID RICHARD QUEST SAY ABOUT RUNNING AN AIRLINE?? (back in Jan 2020 in his DAVOS interview)

Here’s a refresher from You Tube below:
(scroll forward to 05:50, and 06:45 to enjoy the hardest hitting comments)

https://www.youtube.com/watch?v=xQnNn9svVX4

Would not rate their survival chances very high at this stage. Down to 13 aircraft now (ZS-SJF delivered to Budapest 03 Apr 2021) of which only four are currently in use. Certainly not a sustainable cashflow at the moment.

End of comments.

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