South African low-cost carrier, Mango Airlines, is to slash employee salaries by 50%. The small Johannesburg-based airline employs hundreds of people but, like airlines everywhere, has taken a hit this year with services now suspended until the start of June.
The media is informed of pay cuts before employees told
Acknowledging cash has to be conserved, and with banks increasingly reluctant to lend to airlines, the airline has to look for savings where it can. But as IOL.com notes, the South African Government and the airline had confirmed to media the salary cuts would be happening before they notified their employees.
Mango Airlines operates a small fleet of 14 Boeing 737-800s around South Africa and into Tanzania. In addition to having its flights suspended, a big problem for Mango Airlines is its parent company, South African Airways.
The government-owned South African Airways is in dire straits with on-going government funding withdrawn in mid-April and the airline entering into a managed rescue plan. While Mango did turn a profit in 2017 (the last time its parent company South African Airways has released annual financial performance details), the low-cost carrier’s fate is tied to that of its parent.
Savings used to prop up ailing parent airline
According to IOL, the money saved at Mango will be used to help prop up South African Airways. South Africa’s Public Enterprises Minister Pravin Gordhan says employees at Mango Airlines had voluntarily taken pay cuts. However, this contradicts information in the same report that says employees had not yet been informed about the cuts.
“Mango has been a reasonably well-run airline, and we are waiting to see what kind of developments there are, both domestically and globally, in respect of low-cost airlines and what their future is,” said Pravin Gordhan.
By virtue of being a reasonably well-run airline, Mango Airlines runs the risk of been used to prop up ailing South African Airways. There is a suggestion that Mango Airlines could be sold off and the funds redirected back into the parent company.
Is this a case of throwing good money after bad?
Many would suggest that this is merely throwing good money after bad. The problems at South African Airways go back many years and are not just a consequence of the current pandemic. That could see Mango’s employees not only taking a pay cut but also losing their jobs.
At an individual level, that can be catastrophic. On a business level, it would be a great shame. While an agile and lean low-cost carrier lacks the allure of a big long haul national carrier like South African Airways, if it performs better and makes more money than the parent company, there’s an argument it’s Mango the South African Government should be focusing on rather than their inefficient legacy airline.
The potential of aviation in Africa has been well canvased. There’s a view that Mango Airlines could be a significant player in the continent’s low-cost aviation industry, especially around the southern half of Africa. Could this be a case of the South African Government needlessly undercutting a potentially solid airline to prop up a failing airline? Either way, Mango Airlines’ employees look to be carrying the can for the parent company’s failures right now.