South Africa’s Mango to be mothballed until investor found

Mango Airlines (JE, Johannesburg O.R. Tambo) will be mothballed for a lengthy period while it seeks a new investor after its sole shareholder, South African Airways (SA, Johannesburg O.R. Tambo), on Monday, quashed any notion of an early return to service for the debt-ridden budget carrier.

A creditors meeting on Monday was postponed for a maximum of 15 business days to allow for an amendment of Mango’s business rescue plan as proposed in a motion by SAA. This will reflect that the subsidiary will only be able to resume operations once it has identified a preferred strategic equity partner, according to a statement by Mango’s administrator, Sipho Sono. Creditors are to reconvene to vote on the amended plan.

“It is immediately clear that the airline will be mothballed for a considerable period, as the process of securing an investor will take some time. Accordingly, the amended plan will inevitably have to contemplate a greater number of employees being potentially affected by the restructuring than is the case in the current plan that was published on October 29, 2021,” Sono said. He wanted Mango to resume operations in December to safeguard its route rights and take advantage of high season demand, banking on the promised balance of ZAR819 million rand (USD47 million) from a state bailout of ZAR10.5 billion (USD688 million) granted to SAA.

So far, only ZAR100 million (USD6.56 million) has been disbursed to Mango, which has been used to pay the salaries of its 750 employees since the airline went into voluntary administration in July 2021. Sono said SAA and the shareholder representative, the Department of Public Enterprises (DPE), had given their assurances that “funds will be released during the course of this week, or at worst early next week” to implement a voluntary severance scheme already put into motion.

Meanwhile, holders of vouchers to be redeemed for unflown tickets are in limbo. Sono said the intention was still to honour these once Mango resumed operations, but he could not confirm when this would be. Passengers wishing to convert their tickets to claims would have to line up with the rest of the concurrent creditors.

In a separate statement, SAA said there was “no reasonable prospects of Mango succeeding” should it become operational before securing an investor or equity partner. “SAA’s position is that this process should be finalised as soon as possible. SAA says operations should only resume thereafter, thus mitigating the risk of Mango not being able to financially sustain itself going forward.”

The parent firm said it did not believe the current plan presented by Sono that Mango could resume operations in December was feasible. SAA has made it clear that Mango does not form part of its own future, currently being negotiated with its own preferred strategic equity partner, Takatso. The consortium includes ACMI specialist Global Aviation Operations (GE, Johannesburg O.R. Tambo), which owns the Lift Airlines (GE, Johannesburg O.R. Tambo) brand that competes domestically with Mango.

The state-owned airline has a fleet of nine B737-800s, all of which are leased, according to the ch-aviation fleets advanced module.