The sale of South African low-cost carrier Mango Airlines is being held up by the delay of pre-approved funding which had already been earmarked for the airline.
The state-owned budget airline ceased operations last year when financial troubles arose. Mango went into voluntary business rescue at the end of July 2021 and has not flown since. It owes R2.85 billion to creditors and also has about R183 million in un-flown ticket liabilities.
MANGO RELAUNCH DEPENDENT ON FUNDING
The airline cannot resume operations unless it secures a new investor to buy and relaunch the airline. Parliament previously approved a special allocation of R819 million for Mango’s restructuring, from R10.5 billion allocated to South African Airways (SAA) by Treasury.
Mango’s business rescue plan stipulates that any potential buyer would have to prove that it has access to at least R200 million to enable Mango Airlines to resume operations since the Department of Public Enterprises (DPE) stipulated that government funding cannot be used for the airline’s restart.
BUYERS FOR AIRLINE ‘IN ADVANCED STAGE’
Mango’s business rescue practitioner Sipho Sono reported that the process of finding a suitable investor to buy the airline is at an advanced stage. Sono has reportedly received four binding offers from qualifying bidders.
Fin24 states that the binding offers have been evaluated and that two of these were found to substantially meet the stipulated requirements. According to Sono’s report, a preferred bidder and a reserve bidder were selected and notified.
“In the event that the preferred bidder is unable to fulfil the conditions of the transaction agreements, the reserve bidder will be approached to conclude the transaction. To this extent, the reserve bidder has been given a timeline by which to provide certain information, following which they will be provided the draft transaction agreements,” Sono states in his report.
In an update to creditors dated 30 April, Sono says without the payment from SAA, the sale of Mango is at risk. Mango Airlines has threatened SAA with legal action to force it to pay over the outstanding funds which the beleaguered carrier insists are overdue.
If the sale of Mango Airlines does not materialise, the airline will be wound down.
ALSO READ: The end? An ode to Mango Airlines [watch]
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