The sale of South Africa's budget carrier Mango Airlines may have to be abandoned after Pravin Gordhan, the Minister of Public Enterprises, withheld his approval within the 30-day time frame. This was due to queries from Mango's parent company, South African Airways.

Sudden turn of events

After ceasing operations, Mango Airlines appointed Sipho Sono, a senior business rescue practitioner (BRP), as the provisional liquidator in order to find investors. The parent company, South African Airways, is seeking approval for the disposal of its shares in Mango.

Following the submission of this application, the airline released a statement that read;

"The BRP regrets to inform affected parties that despite the positive update provided in the previous report, the Minister is yet to make a decision on the Application."

It seems that the Public Enterprises minister withheld his approval because he was not content with certain queries raised by South African Airways. Simple Flying has reached out to South African Airways to find out more about these queries, and we will update the article with any response.

The national carrier initially submitted an application to sell Mango on September 30. The BRP handed in another application on November 28 to the Department of Public Enterprises, who had 30 days to make a decision. However, the Minister is still yet to give his verdict.

This delay means Mango Airlines and investors may have to part ways, which would result in the wind-down of the once loved airline. In an effort to avoid this, Sono added that they are currently assessing whether the concerns raised can be resolved and will give feedback in respect of all parties involved.

Mango Airlines has been seeking new ownership for a while

South Africa's budget carrier has been seeking new ownership for the past 18 months since ceasing operations. There was a deal agreed upon for Mango to be bought by August 2022, but on the 7th of that month, the airline's flying license was suspended for two years.

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.

Mango has not flown since July 2021, just before entering a business rescue plan similar to that of Comair. In one of their last statements, the budget carrier’s acting CEO, William Ndlovu apologized to customers saying,

"Dear Guests, Mango Airlines apologizes for today's flight interruptions and delays.

We can confirm that our services and all flights are temporarily suspended from today, 27 July 2021 until further notice due to outstanding payments to ATNS. Senior management and our shareholder are locked-in in emergency discussions to find an amicable solution to this impasse."

This marked the last day that the vibrant airline graced the South African airspace.

The airline is on the verge of collapse, chiefly because of its license suspensions, and debts and liabilities outweighing the value of its assets. If Mango cannot secure new investors, it may fall into liquidation, with its few assets being sold to pay creditors.

National Treasury may be Mango's lifeline

Sono and Mango had hoped that the Minister of Public Enterprises would approve the sale of the airline before the deadline. The minister's delay means that the future of the domestic airline hangs on a knife edge.

We understand that South African Airways was supposed to receive a letter from the National treasury stating that the airline would have to submit its sale application directly to them. As per the Public Finance Management Act, the application can be deemed as approved if not responded to in 30 days by the responsible authorities, although South African Airways and DPE have agreed to extend this deadline by another month.

Sono believes that there is reasonable cause to rescue the company and that the business rescue process would be better for creditors and other parties than what would result if the company was to be placed in liquidation. Numerous players in the sector wish to see the domestic carrier back in operation as it would help solve the current challenges in aviation, including seat and airline pilot shortages.

Sources: ch-aviation, Mango Airlines