Gov’t passes law that releases funds for Mango

South Africa’s President Cyril Ramaphosa has signed off a new law that is to release urgently-needed state funds for its struggling state-owned budget carrier Mango Airlines (JE, Johannesburg O.R. Tambo).

Published in the official government gazette, the Special Appropriation Act, 2021 makes ZAR819 million rands (USD57.3 million) of state aid available for Mango, as well as ZAR1.663 billion (USD115.8 million) to maintenance provider SAA Technical, and ZAR218 million (USD15.1 million) to catering firm SA Airchefs. The amounts form part of ZAR2.7 billion (USD188,8 million) diverted from a ZAR10.5 billion (USD734.2 million) re-allocation of state funds for the rescue of Mango’s parent, South African Airways (SA, Johannesburg O.R. Tambo).

This comes as Mango’s 750 employees on June 29 were on edge, waiting to hear if they would be paid and if the airline would be flying from July onwards following delays in the transfer of the critically-needed funds.

By June 29, the money had not yet been transferred, meaning Mango employees were not paid on June 25 as they should have been, and the airline had not been able to schedule flights beyond June 30.

Mango has been operating on a shoestring for months with employees having received only partial or late payments. As reported, most of its aircraft have been stored due to technical issues and the carrier’s inability to pay vendors means the airline is at constant risk of being grounded due to deferred payments.

“It’s crunch time. We are waiting for DPE (Department of Public Enterprises) to come back to us. Either today or tomorrow we should know what will be happening from July onwards,” Mango spokesperson Benediction Zubane told ch-aviation earlier on June 29.

A Mango employee who asked not to be named said the situation was “very stressful”. “We need more predictability. We can’t sustain these stop-start operations. We need a decision to be made that Mango can operate during July and beyond. It’s very tough at present.”

DPE spokesperson Richard Mantu could provide no further clarity on the transfer of the ZAR819 million, and referred ch-aviation to the National Treasury, which was not able to comment immediately.

Mantu said the release of funds was not linked in any way with a due diligence process of SAA’s subsidiaries currently being conducted by the Takatso Consortium, SAA’s preferred new strategic equity partner. The consortium, comprising ACMI specialist Global Aviation Operations and state-funded asset manager Harith General Partners, has signed a memorandum of understanding with the government for a 51% share in SAA, but a formal sales agreement is still pending.

Meanwhile, Zubane said Mango has been operating in June, albeit on a very limited basis. Flightradar24 ADS-B data shows it has been operating with three B737-800s only – ZS-SJA (msn 29248), ZS-SJM (msn 30476), and ZS-SJN (mns 30569) – on the so-called “golden triangle” between Johannesburg O.R. Tambo, Cape Town, and Durban King Shaka.

By April 2021, Mango’s market share had shrunk from 30% pre-COVID to 14%, with private budget competitors FlySafair and Kulula Air both holding 33% of the domestic market, according to DPE statistics.