Sale of South Africa’s budget airline Mango hits a snag as potential buyers walk away

BusinessTech Africa has just found out that Mango Airlines could be in trouble after its business rescue practitioner (BRP) warned that the group may have to abandon its rescue plan and start winding down proceedings.

In the 14th business rescue attempt for the group, the BRP said that a sudden turn of events had clouded the airline’s successful turnaround prospects.

Mango has not flown since July 2021 and was placed in voluntary business rescue 2021 – that was followed by the appointment of business rescue practitioners appointed in August of the same year.

The group was allocated R819 million to execute a rescue strategy, which involved reducing operations and cutting staff.

Media reports suggest that forming part of the business rescue plan, the South African government, through the Department of Public Enterprises, wants to dispose of its shareholding in the group and have the airline snapped up by private investors.

Looking at the final update for the previous year and published in mid-January, the BRPs’ tone has changed significantly, with the process having apparently hit a snag as the group is yet to receive confirmation of the disposal from the ministry.

“We understand that the Minister wrote to SAA on or about 20 December 2022, expressing a view that he was not completely satisfied with the responses to the queries raised by SAA,” said the BRP per BusinessTech.

“We further understand that SAA was also meant to receive a letter from National Treasury, communicating National Treasury’s view that the application will have to be resubmitted directly to National Treasury, and until that happens, National Treasury does not believe that the submission of the Application to DPE is complete

“The BRP has not been provided with copies of the letters from the DPE and National Treasury referenced above. However, following an SAA board meeting on Tuesday, 10 January 2023, the BRP was provided with a letter from SAA dated 11 January 2023 summarizing the DPE and National Treasury’s concerns.

“The BRP is considering the SAA letter to determine whether the issues raised are capable of resolution, and feedback in respect hereof will be provided to affected parties in due course.”

Mango’s position is complicated by the group having had its air licences suspended in August 2022 for two years after it remained grounded beyond the 12-month grace period afforded by the Air Services Licensing Council.

The licenses that allowed Mango to fly had been suspended by the Air Services Licensing Council (ASLC) because the airline had been out of operation for over a year. Without these licenses, parties that were willing to invest in the state-owned carrier may have walked away.

CH-Aviation reports that in his latest update to creditors of the state-owned budget carrier, provisional liquidator Sipho Sono said: “Given this sudden turn of events, there is now the possibility that the transaction or investor process […] may have to be abandoned and for the business rescue practitioner to implement the wind-down process that is already incorporated in the adopted business rescue plan”.

Meanwhile, the local aviation sector has experienced several high-profile liquidations over the last year, with both Comair (Kulula) and SA Express being shut down.