Good news for flight prices — Mango could soon prepare for take-off

Nearly three years and numerous government-imposed delays later, South African Airways’ (SAA’s) sale of budget airline Mango to a private entity is set to proceed, paving the way for a potential return to the skies.

Mango has been grounded since it entered business rescue in July 2021, following a punishing period of inactivity and constrained operations during the Covid-19 pandemic.

As part of a process to restructure and save its struggling parent into a more fit-for-purpose airline, Mango was put up for sale.

Its business rescue practitioner (BRP), Sipho Sono, had already published a plan to save the airline — once a bright spot in SAA’s gloomy financial statements — by November 2021.

At the time, Sono said he was convinced of a decent chance of success for Mango if it received the required working capital in time.

That money included R719 million of R819 million that SAA owed Mango as part of a bailout package approved by Parliament.

However, SAA maintained Sono’s plan would not be feasible until a private buyer was secured.

Sono was sent back to the drawing board and found a buyer for Mango by early 2022. The investor was able to deliver proof of funding to acquire the airline by August 2022.

Editorial credit: Rob Atherton / Shutterstock.com

While the agreed-upon price was not revealed, Mango’s business rescue plan required that they have access to at least R200 million to enable Mango to resume operations.

After the buyer furnished the necessary bank guarantee for the full purchase price, the Department of Public Enterprises (DPE) was asked to urgently approve the purchase, in line with the Public Finance Management Act (PFMA).

However, public enterprises minister Pravin Gordhan dragged his heels in making the decision, leading to Mango’s BRPs taking legal action.

In September 2023, the North Gauteng High Court ruled that Gordhan had to decide whether Mango could be sold to the investor within 30 days, as prescribed by the PFMA.

Gordhan applied for leave to appeal the ruling, which was dismissed by the Supreme Court of Appeal (SCA) on Friday, 15 March 2024.

Sono said even if the SCA had agreed to hear the matter, it would not have changed that the deal had been deemed approved by virtue of the minister’s failure to make a decision within the stipulated timeframe.

Subsequently, Sono said there was no reason why the sale should not be finalised with the investor.

Editorial credit: Suzanne Cecelia Jewell / Shutterstock.com

In feedback to MyBroadband in the week following the SCA’s ruling, Sono again reiterated that there was a reasonable prospect for Mango to be saved.

“The market definitely needs Mango to make a return,” Sono stated.

Mango’s grounding during the past three years, coupled with Comair going out of business and taking budget carrier Kulula along with it, has severely constrained domestic flight seat availability in South Africa.

The market is shared primarily by three airlines — Airlink, Lift, and FlySafair — with far less capacity than before the Covid-19 pandemic.

However, Sono said it was still too early to commit to any timelines for Mango’s potential relaunch.

“There is quite a lot of work to be done before we can announce timelines. We will announce in due course,” Sono said.

Mango’s operating licences were suspended for two years in August 2021, after it failed to fly for over a year.

Sono also said the deal’s value would be disclosed to Mango’s creditors soon.

“For now, the focus is to get the deal firmly on track and prepare detailed plans for the relaunch.”

As of 2022, Mango owed R2.85 billion to creditors and had about R183 million in unflown ticket liabilities.

Takatso deal blamed for delays

The Mango Pilots’ Association spokesperson Jordan Butler previously said he believed the real reason why SAA had resisted the sale was because Mango’s re-emergence would threaten the sale of a controlling stake in SAA to the Takatso Consortium.

The Takatso Consortium includes Global Airways low-cost carrier, Lift, a direct competitor of Mango.

“All three, SAA, Mango, and Lift, cannot exist in the same arena,” Butler said.

The mysterious deal with Takatso would have seen SAA sold for R51 but fell through shortly after unprecedented attempts by Gordhan to keep the details of the agreement under wraps when he was asked to account on its status in Parliament.

Gordhan is set to retire after South Africa’s upcoming national and provincial elections.