Mango Airlines Rescue Halted as Creditors Challenge Controversial Debt Deal

Mango Airlines Faces New Turbulence as Court Grounds Rescue Plan

In a major setback for Mango Airlines, the Gauteng High Court has grounded its controversial business rescue plan, siding with creditors who argued they would lose significant sums if it proceeded. The decision, announced by Judge Denise Fisher on June 17, effectively halts a strategy which creditors described as little more than a transfer of their outstanding debts without fair value.

This comes as a big blow for the aviation industry after Mango’s ambitious comback plan was launched not too long ago. And just as South Africans were gearing up to take to the skies once again with their favourite airline, those hopes have once again been dashed.

Behind Mango’s Turbulent Skies

Since Mango plunged into business rescue back in July 2021, it has been navigating through stormy skies of financial instability. Burdened with debts totalling a staggering R2.91 billion, the low-cost carrier has struggled to find its financial footing. Among those owed is Aviation Coordination Services (ACS), a key aviation services provider responsible for baggage handling and passenger check-in. ACS alone is owed R23.3 million.

Although Mango’s proposed plan initially appeared promising—attracting approval from 98% of voting creditors—it quickly drew sharp criticism from ACS, who viewed the details as deeply unfair.

Why the Creditors Revolted

At the heart of ACS’s discontent was the proposed repayment structure: creditors would only recover a mere 4.43 cents for every rand owed. To put this in stark perspective, that would mean receiving roughly R44,300 for every million rand owed—a proposal ACS deemed unacceptable.

But the real sticking point, and the issue that ultimately swung the court’s decision, was a clause allowing Mango to transfer the balance of outstanding creditor debts directly to a new investor for what ACS described as “nominal consideration.” This effectively stripped creditors of their ability to reclaim owed funds directly.

Social media reactions to the ruling were swift, with aviation observers and affected customers calling the arrangement a “raw deal” for creditors. Local industry experts also weighed in, questioning the fairness of transferring debt obligations without due financial compensation.

Judge Fisher’s Ruling Reshapes Mango’s Future

Judge Denise Fisher did not mince words when delivering the verdict. She highlighted that, stripped of its complexity, the business rescue plan essentially amounted to a “confiscation” of creditor claims, transferring valuable debts to a third-party investor without fair compensation.

Her judgment sends a clear message: any rescue effort must ensure creditors’ rights are preserved, setting an important legal precedent for similar cases in the South African aviation sector.

What Happens Next for Ticket Holders?

Adding further anxiety for passengers, Mango holds around R183 million in unflown tickets. The airline recently assured affected passengers that it would honour these tickets through full-value refunds, contingent upon successfully implementing its business rescue plan. Following this ruling, those passengers’ hopes for swift reimbursement now hang uncertainly in the balance.

Turbulent Skies Ahead for South African Aviation

Mango’s courtroom drama highlights broader challenges facing South African airlines, especially in an industry still recovering from post-pandemic economic shocks. With Mango’s rescue halted, questions linger about whether the airline can find an alternative route to survival—or whether creditors will push harder to reclaim debts directly, potentially hastening the airline’s permanent closure.

As the dust settles from this latest legal turbulence, Mango Airlines finds itself at a crossroads. The path it chooses next will significantly shape the landscape of South African air travel, as creditors, passengers, and the broader aviation community watch closely to see how this saga unfolds.

Source:Tourism Update

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