Bad news for Mango takeoff

A prominent aviation expert has questioned the point of a private company’s acquisition of Mango and raised doubts that its relaunch could reduce domestic flight ticket prices in South Africa.

According to Mango’s business rescue practitioner, Sipho Sono, the company had the all-clear to proceed with its sale from under state carrier South African Airways (SAA) following a ruling by the Supreme Court of Appeal in March 2024.

Sono had for years maintained that Mango remained viable provided a private investor could provide the necessary capital injection, and the airline received its due in the form of a bailout approved by Parliament.

The court had dismissed public enterprises minister Pravin Gordhan’s appeal against a September 2023 decision by the North Gauteng High Court, which ordered the minister to decide whether Mango could be sold to a private investor within 30 days.

That ruling was based on legislation in the Public Finance Management Act.

Sono told MyBroadband that even if the SCA had agreed to hear the matter, the transaction was allowed to proceed because the minister failed to make a decision within the timeframe.

While Sono himself has not confirmed the name of the acquiring investor, a letter from the court case obtained by News24 has revealed that Ubuntu Air Services is the buyer.

The company’s directors are Marian Sandu, founder and CEO of tour operator Africa Stay, and Josh Loots, CEO of financial services company DG Capital.

Plane Talking managing director Linden Birns told MyBroadband that he was curious to know Ubuntu’s motivation for the acquisition as the company’s name was all that remained of Mango.

“There are no aircraft, no personnel, no routes or licences, and no infrastructure for ticketing sales and distribution, revenue management, operations and maintenance,” Birns said.

Editorial credit: Suzanne Cecelia Jewell / Shutterstock.com

According to the BRP’s latest calculations, Mango has assets worth only around R100 million and liabilities of R3 billion, including unflown tickets.

Birns acknowledged he was not a marketing and branding expert but questioned what value remained in the Mango brand and name.

“If one is going to spend the money on aircraft, staff, skills, or expertise, why not also opt for a clean slate with the name and brand?” he said.

Birns said he was unfamiliar with Ubuntu and its proposal to do with Mango. However, the current information he does have indicates that the airline was unlikely to return as a major domestic flight provider.

“All I have heard  — and it is second-hand, unverified info — is that it will not be operating as a scheduled airline,” Birns said.

Instead, Mango could function as Africa Stay’s aviation component, similar to how TUI or Thomas Cook operate in Europe.

“If this is the case, then it won’t be a direct competitor to SAA, Lift, Airlink, Cemair, or FlySafair as its flights would be grouped together with accommodation, land transport, meals and excursions as an all-inclusive package,” Birns said.

Linden Birns, managing director of Plane Talking

South Africa’s domestic flight prices have remained high in the past two years due to limited seat availability.

Two of the biggest contributors to this decline were Mango’s grounding in July 2021 and the shutdown of Kulula operator Comair in 2022.

Birns said that no local airline could escape certain hard costs and economic factors, regardless of the number of competitors.

“The price of jet fuel in Southern Africa is among the highest worldwide as it is no longer produced in the region. We rely 100% on imports,” Birns said.

These imports carry additional taxes and duties on shipment, distribution and storage.

Airlines must also pay statutory airport, air navigation services and meteorological service charges, SACAA regulatory and licencing fees, insurance and interest rates on borrowings.

In addition, airlines are particularly susceptible to the performance of the rand, as many of the industry’s costs are charged in US dollars.

Birns said although labour was relatively cheap in South Africa, local airlines, airports, and the Air Traffic Navigation Service struggled to retain skilled aviation personnel in the face of shortages in other, far more lucrative, markets.

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Bad news for Mango takeoff