Mango’s future in hands of business rescue practitioners - SAA

The low-cost airline, a subsidiary of SA Airways, was placed under business rescue in July 2021 due to financial difficulties.

Last month, the Auditor General told Parliament's Standing Committee on Public Accounts that Mango's survival would only be possible through private investment.

Mango Airlines' business rescue practitioners maintained that the former low-cost domestic airline could be saved, with the process underway to revive its domestic licence and procure aircraft for its fleet.

Addressing the Standing Committee on Public Accounts on Tuesday morning, Lamola said the airline is in the hands of the business rescue practitioner. 

In February, Mango's business rescue practitioner announced he is proceeding with the sale of the low-cost airline to an as-yet-unnamed investor amid a dispute with the late Public Enterprises Minister Pravin Gordhan. 

"The nub of the disagreement between the Department of Public Enterprises Ministry and the business rescue practitioner centred around the Section 54 application,” Lamola told MPs. 

“That application normally includes detailed information upon which the executive authority is to take a decision. The Minister of Public Enterprises felt that not enough information was disclosed to the satisfaction of the minister’s ability to make a decision. That decision was around the issue of the disclosure of the strategic equity buyer of Mango, as the BR had planned to have.

"The business rescue practitioner went further to invoke subsection 3 of the Act, which indicates that if there is no response from the executive authority within 30 days, it is assumed that the application is approved. That ended up in court up to the appeal level, where the court adjudicated in favour of the business rescue practitioner.

"Where the matter is currently, is that there is a business rescue plan that the business rescue practitioner is expected to fulfil and is under the current legal framework. The matter is entirely into the hands of the business rescue practitioner as to where he will take the matter forward."

SAA board chairperson Derek Hanekom said a buyer for the airline had been found.

"Mango remains under business rescue. A lot of it had to do with the status of whether it needed, as a company under business rescue, to put in a Section 54 application to the minister. There would be an argument that once a company like this goes under business rescue, this is not strictly a requirement, but the business rescue practitioner did so.

"I think some of the problems came up because the minister then did not approve the Section 54 application. As far as we are concerned, as the board and management of SAA, the business rescue process should continue. But at the end of the day, once you have handed over to the business rescue practitioner and approved a business rescue plan, you have to stick to what the plan states."

-Road Accident Fund-

At the same meeting, Transport Minister Barbara Creecy said the issue of foreign nationals claiming from the Road Accident Fund is a taxation issue.

The RAF pays hundreds of millions of rands to both legal and illegal foreign nationals every year.

In 2008, the RAF paid out a Swiss billionaire more than R500,000 after he lost two limbs in a motorcycle accident in Cape Town, the highest RAF payout to date.

Addressing the media on its 2023/24 performance results last month, RAF CEO Collins Letsoalo said that current laws and court judgments permitted the social benefit scheme to pay out to legal and illegal foreign nationals.

On Tuesday morning, Creecy updated Parliament on the transport financial performance and said a scale needs to be established to measure the fund’s benefits.

"The way the taxation works on this particular fund is that you pay a fuel levy, so if you're buying fuel and you are driving in South Africa, I guess you're entitled by virtue of the fact that you're paying tax, you're entitled to be compensated.

"The real question is whether or not we should be putting a limit on the benefits, and my view is that we do need to have a scale of benefits, and we do need to be putting that limit on the scale of benefits.

"I also think that having a no-fault inclusion in the legislation would really mean that it wouldn't be such an appetising playground for those who might be in the legal profession. It is a huge issue."

-Passenger Rail Agency South Africa-

Creecy said cable theft continues to be an issue at the Passenger Rail Agency of South Africa (PRASA).

Earlier this month, police in KwaZulu-Natal arrested two suspects for R20 million worth of cable theft from the eThekwini Municipality, Prasa, Telkom, and Transnet.

"There are also various IT installations that are being considered so that if somebody touches the wires and tries to cut them, it would alert the security. I must say that PRASA's current security contract is very good,” Creecy said.

"They've managed to reduce theft and vandalism by about 75%. Cable theft remains a big issue in Transnet. Transnet is about to appoint a new security contract and I think we very much hope that it will have similar good benefits that the PRASA contract has had."

-Privatisation of State-Owned Enterprises-

Creecy reaffirmed the government’s opposition to privatising the Passenger Rail Agency of South Africa (PRASA) and Transnet.

Transnet is almost a year into a turnaround strategy it announced in October 2023. The strategy would see it overhaul its rail and port services and tackle the impact of years of mismanagement, theft, and vandalism.

According to the National Treasury, rail inefficiencies cost the economy more than R400 billion in 2022,  while the nation’s minerals council estimates mining exports fell R50 billion short of the target.

Creecy told MPs that the entities must remain state-owned.

"I am opposed to privatisation of either Transnet or PRASA. My view is that the network must remain state-owned, and the reason for that is that these entities have a developmental function in our country.

"The extent to which we take private sector investment must be balanced by evidence and that evidence must be related to the extent to which such investment will help us to recover or not. At the moment, we don't realise the revenue from the operation of our infrastructure.

"Were we to have additional operators, we would be able to recognise that revenue, and it would help us."

ALSO READ: