Extent of Mango’s financial troubles unknown, says aviation expert
An aviation expert says it's difficult to determine how much money Mango will need for its bailout since it failed to issue financial statements for several years.
Flights by the low-cost carrier have been grounded indefinitely, reportedly due to money it owes to the Airports Company of South Africa (ACSA).
Aviation expert Joachim Vermooten says Mango increased its fleet from 4 to 14 aircraft shortly before the Covid-19 pandemic hit.
Vermooten says this decision was unsustainable due to the effects of the pandemic on the sector.
"Today is the outcome of what has been happening in Mango for some time.
"It's scope of operation increased from four to fourteen aircraft which is a massive increase in cost in relation to the demand of passengers carried which didn't grow in that time.
"They haven't issued any financial statement for many, many years so it is difficult to estimate the exact financial situation that it was at the time," Vermooten says.
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He says the airline was given an option by leasing companies to give back the aircraft and lessen the burden, but it declined the offer.
Vermooten says the matter is compounded by the dip in economic activities and travel due to Covid-19.
"The simple hard facts is that Mango is just running out of cash and the cash is more than R900 million that they require to recapitalise it for now.
"Unfortunately that is the interest of not adjusting to the market conditions at all.”
The airline has said it is waiting on national treasury for assistance with bailout money.
Vermooten estimates the bailout needed would be between R1 and R2 billion to cover leasing agreements and creditors.
Vermooten says he believes business rescue is no longer an option to try and save the company.
