The days seem numbered for Johannesburg-based Mango Airlines after sole shareholder South African Airways and its owner, South Africa’s Department of Public Enterprises, has decided Mango Airlines is no longer viable.
South African Airways asks business rescue practitioner to stop funding Mango Airlines
The low-cost subsidiary of South African Airways suspended all flights mid-year after failing to pay monies due to South Africa’s Air Traffic and Navigation Services. Soon after, Mango’s board confirmed the airline had entered into a formal business rescue process.
In the run-up, it was revealed the airline’s 750 employees had not been paid for two months. The airline, which flies to several South African destinations as well as Zanzibar, was carrying US$163.8 million in debt.
In Mango’s heyday, seven Boeing 737-800 aircraft flew up to 40 flights a day across nine routes. But parent South African Airways, facing its own financial battles, has lost interest in its subsidiary airline.
In an October 30 letter to Mango’s business rescue practitioner published in The Citizen, SAA Chairperson Professor John Lamola said his airline was not in a position, nor did it want to provide further funding to help Mango. Referring to an earlier communication, he said;
“We communicated that SAA as the sole shareholder of Mango was not in a position to provide nor to motivate to SAA’s shareholder for any capital injection required to return Mango to commercial operations.”
Professor Lamola went on to request the business rescue practitioner not apply any cash towards restarting Mango. The business rescue plan gave South African Airways that option. The two choices were to fund Mango or wind it down. South African Airways has chosen the second option.
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Monies due don’t flow through to Mango Airlines
Even before the travel downturn and movement restrictions in South Africa, Mango Airlines faced problems with its owner, South African Airways, going into the business rescue process in later 2019.
In early 2021, the South African government provided more than US$700 million to bail out South African Airways. Around US$57 million was meant to find its way to Mango Airlines. But that money never flowed through.
“It has always been my understanding and intention that the purpose for the utilization of the R819 million (US$57 million) would include Mango resuming operations. This has been consistently communicated to SAA and the Department of Public Enterprises,” said business rescue practitioner Sipho Sono in a November 4 letter to Professor Lamola.
“A letter from SAA to the DPE on October 26 also suggests that SAA, at least on the date of the letter, also understood the funds would be used to fund restructuring and working capital.”
Mango Airlines still has some support
Mr Sono believes Mango Airlines has a decent chance of success if critical working capital arrives. But he notes every day the airline is not flying reduces the likelihood of success.
“Every day that Mango is not flying, it is eroding its customer base,” he writes. “The longer the airline is mothballed, the more costly a restart will be with larger associated risks.”
Other than appearing to want to hold onto bailout monies, South African Airways has not given any clear-cut reasons why it wants to shut down Mango Airlines.
On Friday, Mango Airlines is meeting with its creditors. The deliberate leaking of recent correspondence between the business rescue practitioner and South African Airways might embarrass South Africa’s national airline, but it is unlikely to alter the ultimate outcome.